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3. Suppose that changes in bank regulations expand the availability of credit card so that people need to hold less cash. a. How does this

3. Suppose that changes in bank regulations expand the availability of credit card so that people need to hold less cash.

a. How does this event affect the demand for money? ( 2 mks)

b. If the Fed does not respond to this event, what will happen to the price level? ( 2 mks)

c. If the Fed wants to keep the price level stable, what should it do? ( 2 mks)

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