The principal method used

The principal method used

The principal method used by the Federal Reserve to change the money supply isthrough open-market operations. Use the aggregate demand?aggregate supply model toillustrate graphically the impact in the short run and the long run of a Federal Reservedecision to increase open-market purchases. Be sure to label: i. the axes; ii. the curves; iii.the initial equilibrium values; iv. the direction the curves shift; v. the short-runequilibrium values; and vi. the long-run equilibrium values. State in words what happensto prices and output in the short run and the long run.

%d bloggers like this: