Course: ECO 110

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Unit 9 Practice Problem »

Unit 9 Practice Problem

Unit 9 Practice Problem

1. Consider the following graphs:

1. Describe why panel a shows the FED policy of buying bonds.
2. Describe why panel b shows an increase in the money supply.
3. What happens to interest rates?
4. As a result of the interest rate change, what may happen to consumer buying and investment by firms?
5. Why would that result in the change in panel c ?