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Explain how the three policy instruments of monetary policy are used. How can the monetary policy address the problem of inflationary gap or overloading economy
Explain how the three policy instruments of monetary policy are used. How can the monetary policy address the problem of inflationary gap or overloading economy with risks and uncertainties through cause-effect transmission mechanism? Detailed explanations are required. (Please use models necessary and aggregate demand (AD)-aggregate supply(AS) model, Money Demand(MD)-Money Supply(MS) model, Demand for Loanable Funds(DLF)-Supply of Loanable Funds(SLF) model and Foreign Exchange Market model to explain it.)
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