When using the Fed model, the first step is to:

A. Find the output gap.
B. Assess inflation.
C. Identify the shock and shift the curve.
D. Increase the federal funds rate.



Answer :

Final answer:

The first step in using the Fed model involves identifying the shock and shifting the curve to guide policy decisions.


Explanation:

When using the Fed model, the first step is to:

  • Identify the shock and shift the curve.

The Fed model focuses on how the Federal Reserve adjusts monetary policy in response to economic conditions. By identifying the shock and shifting the curve, the Fed can make informed decisions regarding interest rates and money supply to achieve macroeconomic goals.


Learn more about Federal Reserve monetary policy here:

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