Suppose that changes in bank regulations expand the availability of credit cards so that people need to
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Suppose that changes in bank regulations expand the availability of credit cards so that people need to hold less cash.
a. How does this event affect the demand for money?
b. If the Fed does not respond to this event, what will happen to the price level?
c. If the Fed wants to keep the price level stable, what should it do?
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a I f people need to hold less cash the demand for money shifts to the left ...View the full answer
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