1. In the current circumstances, what policy would you recommend that the Fed follow? There is no "wrong answer" to this question, as long as you demonstrate knowledge of the Fed's policy options.
2. Show graphically how the Fed policy you described above would affect the market for loanable funds...if at all!Explain briefly.
3. Describe three ways in which the interest rate changes implemented by the Fed, in part b. of this question, would work their way through the economy in order to improve economic conditions.How would changed interest rates affect business, households, governments, and those involved in imports/exports?