Economics Article Analysis: How far will the Fed go?

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I.B. Economics S.L.II                                                                        Jenna Carey

Mr. Bleiler Block G                                                             November5th 2002

                                                 “How far will the Fed go?”

Due to a weakening in the economy and in effect, an increase in the unemployment rate from 5.6% to 5.7%, the Federal Reserve Policy makers are faced with the decision of how much to cut interest rates in order to strengthen the economy and improve the current problem. Although the cut itself is almost ensured to be put into action, there is some debate and questioning over whether the cut will be one of a quarter-percentage or a half-percentage.

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It was shown in the monthly job reports that a further 5000 U.S. jobs were lost during October and the unemployment rate is rising. Challenger Gray & Christmas reported that job cut announcements were their highest this month since January of last year, and it is the job of the Fed to come up with a solution to this problem to ensure that the economy does not continue to fall in this direction. The Federal bank will have to act using their monetary policy to deliberately change the interest rates in order to affect the economy.

Since interest rates ...

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