What happen to the money market equilibrium when the Fed raises its interest rate target to 6 percent a year following the increase in real GDP? The interest rate _______ and the equilibrium quantity of money _______. A. remains at 5 percent; increases B. rises to between 5 and 6 percent; decreases C. rises from 5 to 6 percent; decreases D. rises from 5 to 6 percent; might increase, decrease, or not change
What happen to the money market equilibrium when the Fed raises its interest rate target to 6 percent a year following the increase in real GDP? The interest rate _______ and the equilibrium quantity of money _______. A. remains at 5 percent; increases B. rises to between 5 and 6 percent; decreases C. rises from 5 to 6 percent; decreases D. rises from 5 to 6 percent; might increase, decrease, or not change
Chapter15: Macroeconomic Viewpoints: New Keynesian, Monetarist, And New Classical
Section: Chapter Questions
Problem 6E
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What happen to the money market equilibrium when the Fed raises its interest rate target to 6 percent a year following the increase in real GDP ?
The interest rate _______ and the equilibrium quantity of money _______.
A.
remains at 5 percent; increases
B.
rises to between 5 and 6 percent; decreases
C.
rises from 5 to 6 percent; decreases
D.
rises from 5 to 6 percent; might increase, decrease, or not change
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