How the goals of the fed influence its response to shocks

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Let’s examine how the goals of the Fed influence its response to shocks. Suppose Fed A cares only about keeping the price level stable and Fed B cares only about keeping output and employment at their natural levels. Explain how each Fed would respond to the following.

[a] An exogenous decrease in wealth.

[b] An exogenous increase in the price of oil.

Reference no: EM131388083

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