Final answer:
An increase in the supply of money (monetary policy) by the Federal Reserve during full employment can create inflationary pressures in the economy.
Step-by-step explanation:
An increase in the supply of money by the Federal Reserve, also known as an expansionary monetary policy, can have various impacts on the economy.
When the US economy is operating at full employment, an increase in the money supply can lead to inflation. This is because the increased money supply stimulates spending and demand, which can push prices upwards.
When the money supply increases, it can also have an impact on GDP and unemployment. An increase in the money supply can stimulate economic activity, leading to an increase in GDP. However, since the economy is already at full employment, the impact on unemployment may be minimal.
Overall, an increase in the supply of money during full employment can create inflationary pressures in the economy.