Decided to engage in contractionary monetary policy

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Assume the federal reserve bank has decided to engage in contractionary monetary policy. Show and explain how the Fed, through open market operations, simultaneously will impact interest rates in the money market and the price of bonds in the bond market.

I believe the Fed will sell bonds to contract the money supply but I am think that will lower the price of bonds because the suppl of bonds increase but I don't know which two graphs I can draw to support my answers. Any help please?

Reference no: EM131165285

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