If the economy is experiencing a recession

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Reference no: EM131391807

a. If the economy is experiencing a recession, what policy would the Federal Reserve System (Fed) implement with regard to interest rates? Explain briefly, including what specifically the Fed would do in the implementation of the policy. b. Show graphically how the Fed policy you described above would affect the market for loanable funds. Explain briefly. c. Describe three ways in which the interest rate changes implemented by the Fed would work their way through the economy in order to improve economic conditions. How would changed interest rates affect business, households, governments, and those involved in imports/exports? d. If the federal funds interest rate is already near zero, show what the effect (or lack of an effect) the Fed’s policy would have. Use a graph of the market for loanable funds.

Reference no: EM131391807

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