The Federal Reserve Bank decides to raise interest rates.

1. Which monetary policy tool will the Fed most likely use?
2. If the Fed raises interest rates, what will happen to the money supply?Why?
3. Describe what will happen on the loanable funds graph.Which curve will shift and in which direction?
4. If the Fed raises interest rates, what will happen to prices and/or inflation?What will happen to the stock market?
5. If the Fed raises interest rates, what will happen to unemployment? Why?