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1. Determine whether it is an expansionary or a contractionary policy. 2. Determine the effect of the monetary tool on the money market, equilibrium interest

1. Determine whether it is an expansionary or a contractionary policy.

2. Determine the effect of the monetary tool on the money market, equilibrium interest rate and equilibrium quantity of money, and on the economy (i.e., effect only on production and spending).

B A MS1 MS2 MS2 MS1 11 11 12 MD MD OM Q1 Q2 Q1

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