Explain how each of the following developments would affect the supply of money, the demand for money, and the interest rate. Illustrate your answers with diagrams.  1. The central bank's bond traders buy bonds in open-market operations. 2. An increase in credit-card availability reduces the amount of cash people want to hold.

Economics: Private and Public Choice (MindTap Course List)
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ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
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Chapter14: Modern Macroeconomics And Monetary Policy
Section: Chapter Questions
Problem 2CQ
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Explain how each of the following developments would affect the supply of
money, the demand for money, and the interest rate. Illustrate your answers
with diagrams. 
1. The central bank's bond traders buy bonds in open-market operations.

2. An increase in credit-card availability reduces the amount of cash
people want to hold.

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