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The economy is operating beyond the full employment output

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Reference no: EM13375606 , Length: 194 words

The economy is operating beyond the full employment output level, thus producing rapid rise in prices of goods and services. The Fed is concerned about high inflation rates. The curb inflation, the Fed shifts to a more restrictive monetary policy by selling government bonds. Explain the transmission of restrictive monetary policy in your own words.

Reference no: EM13375606

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