A recent FOMC statement asserts: "Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent,over the longer run,with its mandate to promote ...price stability." Your parents have taken interest in your fascinating Macroeconomics course and ask you to interpret this quote.* You tell them:
A)"The Fed believes that unemployment is recovering quickly."
B)"The Fed is worried about spiking inflation."
C)"The Fed is worried about deflation or inflation that is too low."
D)"The economy has recovered,and it's business as usual."
E)"The Fed is trying to appease stock markets."

Question

Quizplus · Accepted Answer

The statement indicates that measures of underlying inflation are currently below what the Committee judges to be consistent with promoting price stability in the longer run. This suggests that the Fed is worried about deflation, or inflation that is too low, and may take actions to stimulate the economy and encourage inflation, such as lowering interest rates or implementing quantitative easing.

A Recent FOMC Statement Asserts: "Measures of Underlying Inflation Are