WHEN IT SAYS ILLUSTRATE PLEASE DRAW OUT A GRAPH TO THE BEST OF YOUR ABILITY AS THE GRAPH IS THE MAJORITY OF THE POINTS, THANK YOU IN ADVANCE!

3. Suppose the Federal Reserve steps in to stimulate the economy with an open market operation. What open market operation do you recommend? Describe and illustrate the impact of the open market operation on the market for money (money supply and money demand). What is the impact on the quantity of money and the interest rate? 4. Describe and illustrate the impact of the open market operation from problem #3 on the market for reserves. Specifically, show the impact on the quantity of reserves and the federal funds rate. 5. Describe and illustrate the impact of the open market operation from problem \#3 on the market for bonds. Specifically, show the impact on the price of bonds, interest rate on bonds, and the quantity of borrowing. 6. Describe and illustrate the impact of the open market operation on the short-run real GDP, price level, employment, and wage