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Argue the following premises about central bank monetary policy with respect to market failures: If the income of the economy increases slowly and the Central
Argue the following premises about central bank monetary policy with respect to market failures:
- If the income of the economy increases slowly and the Central Bank does not want to increase the money supply only through government bonds, although it decides that interest rates should be lowered. Graph and explain in a justified way.
- If the money supply in the economy increases rapidly, the central bank decides that in addition to government bonds, they must raise the interest rate to balance the money market. Graph and explain in a justified way.
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