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Economics underlying the response in the economy

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Reference no: EM131752399

Can you please answer this questions, it is from Jones, Macroeconomics chapter 12.

Suppose the Fed announces today that it is lowering the fed funds rate by 50 "basis points" (that is, by half a percentage point). Using the IS-MP diagram, explain what happens to economic activity in the short run. What is the economics underlying the response in the economy?

Reference no: EM131752399

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