Monetary Policy and Inflation Contains

1. The Fed and Monetary Policy

Monetary policy is the action taken by the Federal Reserve to expand or contract the money supply and influence interest rates.

After checking the current news on monetary policy, describe the Fed’s current policy – is it expanding or contracting the money supply, and why? Do you think that this policy could increase or reduce inflation?

2. Inflation – Winners and Losers

We often hear of inflation characterized as a bad thing, but Meyer describes both winners and losers from inflation. Give an example of one way in which you would win from unexpected inflation, and an example of one way in which you would lose from unexpected inflation.

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