Fed Cuts Interest Rates Amid Weakening Job Market

The Fed lowered the federal funds rate at its recent meeting. The inflation rate rose from 2.7 percent in July 2025 to 2.9 percent in August 2025, and the unemployment rate rose from 4.2 percent to 4.3 percent during the same period.—npr.org

Answer the following questions to check your understanding of the story.

1) Why did the Fed lower the federal funds rate?

The Fed is placing more emphasis on its goal of ___________ than on its goal of ___________.

a) real GDP growth; maximum employment

b) stable prices; maximum employment

c) low interest rates; stable prices

d) maximum employment; stable prices

2) What is the Fed’s “maximum employment” goal?

The Fed’s maximum employment goal is ____________.

a) an unemployment rate of 4 percent

b) the highest level of employment that can be attained regardless of inflation during recession

c) the highest level of employment that can be attained while avoiding sustained inflation above 2 percent a year

d) a natural rate of unemployment of 0 percent

Fed Cuts Interest Rates Amid Weakening Job Market

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