New Keynesian Economists Face Model Challenge in Trump's Fed

The video discusses the role of the Federal Reserve in managing inflation, particularly focusing on the influence of new appointees who were shaped by the high inflation era of the late 1970s and early 1980s. It highlights the economic theories developed by these appointees, their views on inflation as a market failure, and the potential implications for future interest rate policies. The discussion also touches on the economic conditions leading up to 2019, including low unemployment and the debate over whether inflation will rise.

What role does the Federal Reserve play in addressing market failures according to the transcript?

• It manages government spending.

• It sets tax rates.

• It controls inflation.

• It regulates the stock market.

Who was responsible for raising interest rates to combat inflation in the late 1970s?

• Alan Greenspan

• Janet Yellen

• Paul Volcker

• Ben Bernanke

What was the inflation rate in the United States in 1979?

• 5%

• 10%

• 20%

• 15%

What is the main concern of the economists mentioned in the transcript regarding low unemployment?

• It will result in increased inflation.

• It will cause a housing bubble.

• It will lead to a stock market crash.

• It will decrease consumer spending.

What is the Federal Reserve's current approach to interest rates as discussed in the transcript?

• Lowering them significantly

• Raising them to a neutral level

• Eliminating them entirely

• Keeping them constant