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G ng.cengage.com C Project 6: Money and Monetary Policy - LBUS 201 OL Principles of Economics I (Summ... X Mind Tap - Cengage Learning Homework Help - Q&A from Online Tutors - Course Hero CENGAGE | MINDTAP Q Search this course ? Homework: Monetary Policy (Ch 15) X 155 150 E If Fed Intervenes 145 A-Z PRICE LEVEL 140 135 130 125 10 11 12 13 14 15 16 17 18 REAL GDP (Trillions of dollars) bongo In this economy, the Natural Real GDP is Since Real GDP is currently $12 trillion (as shown by point A), this level of output means there is currently of On the previous graph, place the tan point (dash symbol) at the new long-run equilibrium output and price level if the Fed does not intervene. (Assume A+ there are no feedback effects on the curve that does not shift.) Now suppose the Fed chooses to intervene in an effort to move the economy more quickly back to its potential output. To do so, the Fed will the money supply, which will the interest rate, thereby giving firms an incentive to investment, shifting the _ curve to the_ On the previous graph, place the black point (plus symbol) at the new long-run equilibrium output and price level if the Fed intervenes in this way and successfully brings the economy back to long-run equilibrium. (Again, assume there are no feedback effects on the curve that does not shift. ) Compare your answers from the previous few questions. If the Fed does not intervene, the economy will likely have relatively high . On the other hand, if the Fed does intervene, it risks causing relatively high , if it changes the money supply too much. Grade It Now Save & Continue