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Suppose that the economic forecasters are predicting that there will be a recession in the US market next year with falling output and slowing inflation.

Suppose that the economic forecasters are predicting that there will be a recession in the US market next year with falling output and slowing inflation. Draw a graph to show the impact in the money market and explain what will happen to the market interest rate. Draw another graph to show the impact in the bond market and explain how these two markets are related.

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