The March 20, 2013, Federal Open Market Committee statement asserts: "To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time . . . at least as long as the unemployment rate remains above 6-1/2 percent . . . and longer-term inflation expectations continue to be well anchored." (http://www.federalreserve.gov/newsevents/press/monetary/20130320a.htm)
Your parents have taken interest in your fascinating Macroeconomics course and ask you to interpret this quote. Which of the following do you tell them?
A) "The Fed believes that labor markets are recovering quickly."
B) "The Fed is worried about deflation."
C) "The Fed is not worried about inflation but is concerned about the real economy."
D) "The economy has recovered, and it is business as usual."
E) "The Fed is trying to appease labor unions."

Question

Quizplus · Accepted Answer

The quote suggests that the Fed is more concerned about the real economy (i.e., employment) than inflation, and will continue its accommodative monetary policy as long as unemployment remains above 6.5% and inflation expectations are anchored.

The March 20, 2013, Federal Open Market Committee Statement Asserts