Implement an expansionary or contractionary monetary policy

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Reference no: EM131506883

If the Federal Reserve Bank wants to counter the effect of the infrastructure spending bill on nominal interest rates, will it implement an expansionary or contractionary monetary policy? This means that it will increase the money supply or decrease it. Use the model of loanable funds to show the effect of the selected policy on nominal interest rates. Remember, the goal is to neutralize the effect on interest rates (keep it constant).

Reference no: EM131506883

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