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Describing supply and demand in the fed funds market and the

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a. Assume that fed funds rate was 4% but fell to 2% due to the monetary policy of the Fed. What type of monetary policy did the Fed enact? Explain by describing supply and demand in the fed funds market and the money multiplier.

b. If the economy were in a trough of the business cycle, what would you expect to happen to the economy in the short-run from the Fed's policy? Explain in detail.

c. If the Fed's policy continued for several years, what would you expect to eventually happen to the economy? Explain while describing the shifts in aggregate supply and demand.

Reference no: EM13303433

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