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In this subsection you have to answer 3 questions that are worth 10 points each. No com- putation is required but you should use formal

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In this subsection you have to answer 3 questions that are worth 10 points each. No com- putation is required but you should use formal concepts studied in class to give your answer. 1. Explain the Feds conventional tools of monetary policy and how each is used to change the money supply. Does each tool affect the monetary base ? 2. Suppose the Fed starts a round of expansionary policy. Everything else equal, what would be the effect on the demand of US assets? and on the US dollar? Attention! Figure(s) is (are) needed! 3. Using the supply and demand analysis of the market for reserves, show what happens to the federal funds rate if, holding everything else constant, checkable deposits increase. Attention! Figure(s) is (are) needed

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