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The United States economy is currently operating above the full employment level of GDP. Draw a correctly labeled AD/AS graph for this economy showing equilibrium
The United States economy is currently operating above the full employment level of GDP.
- Draw a correctly labeled AD/AS graph for this economy showing equilibrium output and price level.
- Identify an open market operation that the Federal Reserve could enact that will solve the problem.
- Show and Explain how the policy you identified in (B) will affect each of the following in the short-run.
output and employment
price level
nominal interest rates
4.If the interest rates you identified in (C) continued, explain what will happen to the following:
U.S. financial assets
International value of the dollar
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