Interest-rate target to neutralize the positive demand shock

Reference no: EM13692497

The Fed’s decided to maintain its low interest-rate target in the face of a rightward shift of theAD curve in the late 1960s which led to an inflationary equilibrium. Discuss the short-run and long-run costs and benefits of the Fed are other two options: raising its interest-rate target to neutralize the positive demand shocks, or doing nothing.

Reference no: EM13692497

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