When using the Fed model, the first step is to:
A)find the output gap.
B)assess inflation.
C)identify the shock and shift the curve.
D)increase the federal funds rate.

Question

Quizplus · Accepted Answer

The first step in using the Fed model is to identify the economic shock and determine how it shifts the aggregate demand or supply curve, which helps in deciding the appropriate monetary policy response.

When Using the Fed Model, the First Step Is To