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Business
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| Number of pages / Number of words: |
6 / 1428 |
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Excess reserves will increase causing the money supply to rise. Interest rates will fall causing investment spending to increase. The aggregate demand will increase causing real GDP to rise by a multiple of the increase in investment. These actions are called an easy money policy (McConnell & Brue, 2004, p...
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The aggregate demand will increase causing real GDP to rise by a multiple of the increase in investment. These actions are called an easy money policy (McConnell & Brue, 2004, p. 275). When the economy is facing inflationary period the Fed must do the opposite of an easy money policy. The Fed must sell government bonds, increase reserve ratio, or increase the discount rate...
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