35 Points ECONOMICS

Who are you for this project?
For this project, you are the Chair of the Board of Governors of the Federal Reserve (usually just called the “Fed Chair”).

What is the situation?
As the Fed Chair, you must report to Congress twice each year to inform them about the status of the economy and the current monetary policy plans of the Federal Reserve. You have just reported to Congress that the Fed intends to start following a contractionary monetary policy. The president is furious! The economy has been growing quickly, and the president intended to use this fact to gain support for reelection in November. If the Fed starts following a contractionary monetary policy, the economy will slow down, which the president’s opponents could use against the president in the election. You have just received an angry letter from the White House, demanding that you explain the actions of the Fed.

What is your task for this project?
You must write a calm, rational response to the president’s angry letter. In this letter, you must include each of the following (though not necessarily in this order):
Explain why the Fed would believe that a contractionary monetary policy is necessary. In other words, something would need to be happening in the economy to cause the Fed to switch to a contractionary policy. Determine what could cause this and give that as your explanation for why a contractionary policy is necessary.
 Explain to the president how each of the three tools of the Federal Reserve could be used in a contractionary way to decrease the money supply. (As a reminder, the three monetary policy tools of the Fed are: open market operations, changing interest rates, and changing reserve requirements.) Let the president know which one of the three tools of the Fed you intend to use first to slow down the economy and why you have chosen that tool instead of the other two options that are available.

Yes, this is your choice. There isn’t a “right or wrong” choice here (as long as you
are choosing one of the three contractionary options that are available to the Fed),
but you must explain yourself in a clear, logical way!

drop a way to communicate with you and ill bless ur venmo when ur done