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Suppose there is an increase in money supply.
(a) Using a graph, show the impact of this situation on the real rate of interest in the short run (combine both money demand and money supply in one diagram).
(b) Explain what happens to investment and aggregate demand.
(c) Elaborate on THREE (3) ways to increase money supply through monetary policy
With regard to global warming policy, describe, in a short paragraph, the importance of: Discounted costs and benefits. Public goods.
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The Fed attempts to increase the money supply to stimulate the economy, but plants are operating at 65 percent of their capacities and businesses are pessimistic about the future.
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