The tools of interest rate adjustment

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Since January of 2001 the Fed has reduced its Fed funds rate target from 6.5 percent to 1 percent. Nonetheless, the number of people at work is less than (and the unemployment rate higher than) when the Fed embarked on this expansionary monetary policy. Why hasn't the Fed's policy been more effective over the last 2.5 years in restoring strong growth and full employment to the economy? Explain in a few sentences.

Reference no: EM1371107

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