What will happen to price and output levels

Reference no: EM133261180

Question: Consider the situation in which the US Federal Reserve Bank decides to contract the economy and answer the following questions.

a. As we noted in class, there are several moves that the US Federal Reserve Bank can take to contract the economy. Please describe the three moves that they can take. (Please use graphs to support your answer).

b. What will happen to price and output levels because of a move to contract the economy? (Please use graphs to support your answer).

c. Does the time horizon play a role in what ultimately happens to price and output levels? Why or why not.

Reference no: EM133261180

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