Figure: Fed Policy 
If an economy is operating below its long-run potential growth rate as shown in the graph, what can the Fed do to bring the economy back toward its long-run growth rate? Explain.
Definitions:
Required Return
The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.
Current Price
The current price refers to the most recent price at which a security, commodity, or currency was traded in a market.
Expected Return
The anticipated profit or loss from an investment over a given period.
Company
An entity engaged in commercial, industrial, or professional activities.
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