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For the following situations describe how the Federal reserve would implement monetary policy. For parts (a) and (b) draw a figure of the reserve market
For the following situations describe how the Federal reserve would implement monetary policy. For parts (a) and (b) draw a figure of the reserve market and explain how it is implemented (you do not need to be exact in quantities). (a) A 0.75bp decrease in the federal funds rate under the limited reserves framework (So standard framework before) (b) A 0.75bp increase in the federal funds rate under the ample reserves framework (c) How would part (a) impact interest rates, inflation in the long run, output and employment (d) How would part (b) impact interest rates, inflation in the long run, output and employment For the following situations describe how the Federal reserve would implement monetary policy. For parts (a) and (b) draw a figure of the reserve market and explain how it is implemented (you do not need to be exact in quantities). (a) A 0.75bp decrease in the federal funds rate under the limited reserves framework (So standard framework before) (b) A 0.75bp increase in the federal funds rate under the ample reserves framework (c) How would part (a) impact interest rates, inflation in the long run, output and employment (d) How would part (b) impact interest rates, inflation in the long run, output and employment
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