Y6

Assume that the U.S. Federal reserve is currently trying to conduct a contractionary policy (reduce the money supply and/or increase the federal funds rate). Draw an AD-AS graph in which you show the shift on the AD curve, the AS curve, or both, in the short run and in the long run, generated by this policy. Explain the graphs and the shift using the key terms from Chapter 12. For the interest rate of equilibrium (innitial) use the Federal Funds rate from the WSJ page posted below, and for the innitial equilibrium GDP value use the GDP 2021r at current prices from the GDP report below.

WSJ page and GDP report:

GDP Report (Click here to download) https://www.bea.gov/sites/default/files/2022-10/gdp3q22_adv.pdf

WSJ Interest rates and yields (Click here to download) https://kckccedu-my.sharepoint.com/personal/acantillo_kckcc_edu/_layouts/15/onedrive.aspx?id=%2Fpersonal%2Facantillo%5Fkckcc%5Fedu%2FDocuments%2FKCKCC%2FClasses%2FEco%20201%2FMaterials%20for%20Discussions%2FTheWallStreetJournal%5F20221024%5FB8%202022%2D10%2D24%2017%5F09%5F22%2Epdf&parent=%2Fpersonal%2Facantillo%5Fkckcc%5Fedu%2FDocuments%2FKCKCC%2FClasses%2FEco%20201%2FMaterials%20for%20Discussions&ga=1