1. Suppose inflation has been high in the U.S. for a number of years. One day the chair of the Fed announces that the Fed will change its policy to combat inflation. The Fed chair outlines the details of the policy and the public believes that the new policy will actually meet its objective. (a) What will change in the bond market and why will it change? (b) What will change in the loanable funds market and whywill it change? Explain and diagrammatically represent your answers.