9. What are the two parts of the Fed's dual mandate? Answer the following with the dual mandateand bullseye chart in terms of signals to the Fed about the status of economy.The Fed's dual mandate, given to it by Congress inshould be federal employment and stable prices.The bullseye chart was developed by the Federal Reserve Bank of Chicago. It is a visual comparison ofthe current state of the economy with the Fed's dual mandate. The chart shows the inflation rate onthe ( horizontal, vertical ) axis and the unemployment rate on the ( horizontal, vertical ) axis and hascrosshairs where the two targets meet.The southwest (lower left) and northeast (upper right) quadrants send conflicting messages about whichmonetary policy is appropriate. If the point showing the actual rates of unemployment and inflationlies (northwest, southeast, southwest, northeast ) of the center of the bullseye, the Fed will be in apolicy predicament. The fact that the actual unemployment rate is below the full-employment rate ofunemployment will suggest that the Fed should be inclined toward a ( expansionary, restrictive )monetary policy. But the fact that the inflation rate is below 2 percent suggests that a ( stimulatory,contractionary) policy is in order.If the point showing the actual rates of unemployment and inflation lies ( northwest, southeast, southwest,northeast ) of the center of the bullseye, the opposite problem exists. There, the unemployment ratewill be suggesting an (expansionary, restrictive ) monetary policy (to reduce the unemployment ratedown to the 4.3 percent target) while the inflation rate will be suggesting a ( stimulatory,contractionary ) monetary policy (to reduce the inflation rate down to 2 percent).states that the Fed's two highest objectives6.

9)1.1970,federal and state 2.vertical axis, horizontal axis Â Â

s appropriate. If the point showing the actual rates of unemploym outheast, southwest, northeast ) of the center of the bullseye, the at. The fact that the actual unemployment rate is below the full-em 11

s appropriate. If the point showing the actual rates of unemploym outheast, southwest, northeast ) of the center of the bullseye, the at. The fact that the actual unemployment rate is below the full-em 11

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 6PA

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