Overall Price Level 48 42 32 19 25 29 Real GDP AD2 AS AD1 AD Please refer to the graph above. Assume we begin in equilibrium at ADO and AS. Ceteris paribus, if the Federal Reserve wants to achieve contractionary monetary policy, which action will they take and what are the new price level and real GDP? O decrease required reserve ratio: $42 price level and 25 real GDP O buy securities (bonds): $48 price level and 19 real GDP O decrease discount rate; $48 price level and 29 real GDP O sell securities (bonds); $32 price level and 19 real GDP

Overall Price Level 48 42 32 19 25 29 Real GDP AD2 AS AD1 AD Please refer to the graph above. Assume we begin in equilibrium at ADO and AS. Ceteris paribus, if the Federal Reserve wants to achieve contractionary monetary policy, which action will they take and what are the new price level and real GDP? O decrease required reserve ratio: $42 price level and 25 real GDP O buy securities (bonds): $48 price level and 19 real GDP O decrease discount rate; $48 price level and 29 real GDP O sell securities (bonds); $32 price level and 19 real GDP

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Create the T-entry for the Fed that goes together with the choice in the question above
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