MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
“The U.S. money supply is shrinking for the first time since 1949, as savings deposits decline and
the Federal Reserve shrinks its $8 trillion
Fed policy and rising interest rates.”
1.1 In terms of the above statement, using the ONE most relevant diagram from below, discuss the
impact on the price level P, and income/output level Y. Include in your answer a discussion of
three (3) pros and cons each of the decision by the Fed to institute such an action.
(28)
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