Fin 100 Week 2 Discussion

Federal ReserveName:Institutional AffiliationFederal ReserveThe policy makers at the Federal Reserve uses the interest rates to control the inflation and unemployment rates. However, the other factors such as tax relief, oil price and At the beginning of the contract, the interest rate is at 4.5, inflation at 2.14 percent and unemployment at 4.75 percent. The inflation is slightly above the target inflation of 2 percent, while the unemployment is below the natural unemployment unemployment rate of 5 percent. My aim is to achieve more employment while keeping the inflation rates low. To keep the inflation from rising rapidly, I raise and maintain the interest rate at 5.5 for three quarters. From the fourth quarter, I reduce the rates to 3.00 percent to take care of the increasing unemployment. Lower rates promotes faster growth, and thus a higher demand for labor. I maintain the rates at 3.00 percent for the next two quarters, then lower it further to 2.75 to promote further growth. The unemployment rate continues to reduce steadily while inflation rises gradually due to the pressure on prices from increased demand by households. By the end of the 8th