Assignment task 1: The post-pandemic economy is one characterized by record high levels of inflation. In order to reduce the rate of inflation, the Federal Reserve to undertook six monetary policy measures to increase interest rates in the economy. Higher interest rates impact the return to savers. Higher interest rates will also impact the borrowing costs to businesses and individuals.
A. Over time, how might the Federal Reserve's current monetary policy measures impact real GDP?
B. Over time, how might the Federal Reserve's current monetary policy measures impact unemployment in the U.S.?
C. Over time, how might the Federal Reserve's current monetary policy measures impact the Federal Government's budget?
Assignment task 2: Approximately twenty states are refunding state taxpayers and/or reducing sales or income taxes. For example, the Massachusetts Department of Revenue will be refunding state income taxpayer's 14% of their 2021 state liability based upon a MA law (62F).
A. How will this impact consumer spendable income in the states issuing tax rebates or tax liabilities?
B. Will these measures likely impact consumer savings or consumer spending?
C. Will the actions of these 20 states likely reinforce or counteract the current Federal Reserve policy measures?