Answered: Hanging out the side of the helicopter,…

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 9WNG

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Question

In a short period of temporary insanity, Jerome Powell, Chairman of the Fed, dons a Santa Claus suit the day after Thanksgiving and stuffs a toy bag full of brand new, never before circulated crisp $100 bills. He rents a helicopter and instructs the pilot to fly as low as possible over the streets of Washington, D.C. Hanging out the side of the helicopter, he slowly dumps the bag containing a total of $100 million to the cheering crowds gathering below. He simply yells “Happy Black Friday shopping to all and to all a rich night!”

Holding all else equal, answer the following questions:

How might Santa Powell’s actions affect:

interest rates
inflation
unemployment

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