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 a)The Fed’s bond traders buy bonds in open-market operations. b) An increase in credit-card availability reduces the amount of cash people want to hold. c)The Federal Reserve reduces bank’s reserve requirements d) Households decide to hold more money to use for holiday shopping e) A wave of optimism boosts business investment and expands aggregate demand.
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 a)The Fed’s bond traders buy bonds in open-market operations. b) An increase in credit-card availability reduces the amount of cash people want to hold. c)The Federal Reserve reduces bank’s reserve requirements d) Households decide to hold more money to use for holiday shopping e) A wave of optimism boosts business investment and expands aggregate demand.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand
Section: Chapter Questions
Problem 1PA
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Explain how each of the following developments would affect the supply of money , the
a)The Fed’s bond traders buy bonds in open-market operations.
b) An increase in credit-card availability reduces the amount of cash people want to hold.
c)The Federal Reserve reduces bank’s reserve requirements
d) Households decide to hold more money to use for holiday shopping
e) A wave of optimism boosts business investment and expands aggregate demand.
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