You've been asked to spend a week or so as the Fed chairman

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You've been asked to spend a week or so as the Fed chairman. It will turn out to be a very interesting week. If your goal is to stabilize inflation and economic activity, what would be your

response to these three events? Consider each event individually, independent from the others:

(a) A rapid rise in the stock markets rapidly in-creases people's wealth;

(b) Chilean citizens get a sudden taste for Buffalo hot wings (they must be made in Buffalo); and

(c) firms begin to grow anxious about the decline in consumer confidence.