5. Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp and prolonged inflationary trend.
What changes in

(a) the reserve ratio,

(b) the discount rate, and

(c) open-market operations would you recommend?
Explain in each case how the change you advocate would affect commercial bank reserves, the money supply, interest rates, andaggr egate demand. LO3