PLEASE HELP WITH AN EXPLANATION AND GRAPH

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a ng.cengage.com 20105254 742x639 pixels Course Hero CENGAGE I MINDTAP Homework: Monetary Policy (Ch 15) MindTap - Cengage Learning Q Search this course Back to Assignment Attempts 0.5 o 40 Average 0.5 / 3 A-Z 1. Equilibrium in the money market The following diagram represents the money market in the United States, which is currently in equilibrium, as indicated by the grey star. Money Supply 6.0 5.5 Money Demand New Curve New Equilibrium z 5.0 4.5 3.5 3.0 2.5 2.0 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 QUANTITY OF MONEY (Trillions of dollars) Suppose the Federal Reserve (the Fed) announces that it is lowering its target interest rate by 25 basis points, or 0.25%. It would achieve this by the . Use the green line (triangle symbols) on the preceding graph to illustrate the effects of this policy. Place the black point (plus symbol) on the graph to indicate the new equilibrium interest rate and quantity of money. The sequence of events that results in a new equilibrium interest rate, after the Fed makes the change you selected, may be described as follows: Because there is v money in the financial system, the quantity of interest-bearing financial assets such as bonds demanded which means that bond issuers interest rate is achieved. sell bonds. This process continues until the new equilibrium Grade It Now Save & Continue Continue without saving