U.S Money Markets are now pricing in 100% probability of a 25 basis points increase in the Federal Reserve Rate by December 2022 Versus 88% probability before the data on CPI was released.

Use the economic theory (use all models) to explain what would be the macroeconomics effects of this monetary policy. What are the consequences for the final economy ( real money balances market, IS-LM , level of national income and level of prices). Draw all the graph and use the models (equations) explain.