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The following graph represents the money market for some hypothetical economy. This econorny is similar to the United States in the sense that it has

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The following graph represents the money market for some hypothetical economy. This econorny is similar to the United States in the sense that it has a central bank called the fed, but a major difference is that this economy is dosed (and therefore does not have any interaction-with other world economies). The moncy market is currently in equibrium at an interest rate of 5% and a quantity of money equal to $0.4 triltion, designated on the graph by the grey star symbol. Suppose the Fod announces that it is lowering its target interest rate by 25 basis points, or 0.25 percentage points. To do this, the Fed will use openmarket operations to Use the green line (trangle symbol) on the previous graph to whstrate the effects of this policy by placing the new money supply aurve (MS) in the carrect location. Place the block point (plus symbol) at the new equihbrimm interest rate and quantity of money. Suppose the following graph shows the aggregate demand curve for this economy. The Fed's policy of targeting a lower interest rate will the cost of bortowing. cousing residential and business investment spending to and the quantity of output demanded to: at eisch price level. Shit the curve on the graph to show the general impoct of the fed's new interest rate target on aggregate demand. (?) Aggregate Demand OUTPUT

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