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Question: Suppose that the inflation rate increases and the Federal Reserve responds by taking actions to raise theshort-term nominal interest rate. Which of the following

Question:Suppose that the inflation rate increases and the Federal Reserve responds by taking actions to raise theshort-term nominal interest rate.

Which of the following best describes the impact of theFed's actions on the money marketgraph?

A.

Supply shifts leftwards.

B.

Supply shifts rightwards.

C.

Demand shifts leftwards.

D.

Demand shifts rightwards.

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