Need proper explanation. What issues is the FOMC concerned about thatare impacting economic growth?What impact does the Fed funds target rate haveon the economy and what might the FOMC do tocombat inflation and why?What specific economic indicators does the Feddiscuss and how do they impact the economy?

Central bank is the head of all commercial banks. There are many responsibilities that the central…

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Economics

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Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter15: Macroeconomic Viewpoints: New Keynesian, Monetarist, And New Classical

Section: Chapter Questions

Problem 17E

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Concept explainers

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.

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Need proper explanation.

What issues is the FOMC concerned about that
are impacting economic growth?
What impact does the Fed funds target rate have
on the economy and what might the FOMC do to
combat inflation and why?
What specific economic indicators does the Fed
discuss and how do they impact the economy?

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