Please answer everything in the photos including both of the graphs. Use the green line (triangle symbol) on the previous graph to illustrate the effects of this policy by placing the new money supply curve (MS) in thecorrect location. Place the black point (plus symbol) at the new equilibrium interest rate and quantity of money.Suppose the following graph shows the aggregate demand curve for this economy. The Fed's policy of targeting a lower interest rate willthe cost of borrowing, causing residential and business investment spending toat each price level.Shift the curve on the graph to show the general impact of the Fed's new interest rate target on aggregate demand.PRICE LEVELOUTPUTAggregate Demandand the quantity of output demanded toAggregate Demand+ The following graph represents the money market for some hypothetical economy. This economy is similar to the United States in the sense that it hasa central bank called the Fed, but a major difference is that this economy is closed (and therefore does not have any interaction with other worldeconomies). The money market is currently in equilibrium at an interest rate of 4% and a quantity of money equal to $0.4 trillion, designated on thegraph by the grey star symbol.INTEREST RATE (Percent)6.05.55.04.54.03.5 43.0 +2.52.00Money Demand0.1+0.30.2Money Supply0.40.5MONEY (Trillions of dollars)0.60.740.8ANew MS Curve++New EquilibriumSuppose the Fed announces that it is lowering its target interest rate by 75 basis points, or 0.75 percentage points. To do this, the Fed will use open-market operations tothe public.themoney by

The measure that depicts currency and other instruments that are liquid in nature in the economy of…

The following graph represents the money market for some hypothetical economy. This economy is similar to the United States in the sense that it has a central bank called the Fed, but a major difference is that this economy is closed (and therefore does not have any interaction with other world economies). The money market is currently in equilibrium at an interest rate of 4% and a quantity of money equal to $0.4 trillion, designated on the graph by the grey star symbol. 6.0 5.5 5.0 4.5+ 4.0 3.5 3.0 + 2.5 2.0 0 Money Demand 0.1 Money Supply 0.4 0.3 0.5 MONEY (Trillions of dollars) 0.2 0.6 0.7 0.8 A New MS Curve = + New Equilibrium appose the Fed announces that it is lowering its target interest rate by 75 basis points, or 0.75 percentage points. To do this, the Fed will use open- rket operations to the money by the public.

The following graph represents the money market for some hypothetical economy. This economy is similar to the United States in the sense that it has a central bank called the Fed, but a major difference is that this economy is closed (and therefore does not have any interaction with other world economies). The money market is currently in equilibrium at an interest rate of 4% and a quantity of money equal to $0.4 trillion, designated on the graph by the grey star symbol. 6.0 5.5 5.0 4.5+ 4.0 3.5 3.0 + 2.5 2.0 0 Money Demand 0.1 Money Supply 0.4 0.3 0.5 MONEY (Trillions of dollars) 0.2 0.6 0.7 0.8 A New MS Curve = + New Equilibrium appose the Fed announces that it is lowering its target interest rate by 75 basis points, or 0.75 percentage points. To do this, the Fed will use open- rket operations to the money by the public.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Please answer everything in the photos including both of the graphs.

Use the green line (triangle symbol) on the previous graph to illustrate the effects of this policy by placing the new money supply curve (MS) in the
correct location. Place the black point (plus symbol) at the new equilibrium interest rate and quantity of money.
Suppose the following graph shows the aggregate demand curve for this economy. The Fed's policy of targeting a lower interest rate will
the cost of borrowing, causing residential and business investment spending to
at each price level.
Shift the curve on the graph to show the general impact of the Fed's new interest rate target on aggregate demand.
PRICE LEVEL
OUTPUT
Aggregate Demand
and the quantity of output demanded to
Aggregate Demand
+

The following graph represents the money market for some hypothetical economy. This economy is similar to the United States in the sense that it has
a central bank called the Fed, but a major difference is that this economy is closed (and therefore does not have any interaction with other world
economies). The money market is currently in equilibrium at an interest rate of 4% and a quantity of money equal to $0.4 trillion, designated on the
graph by the grey star symbol.
INTEREST RATE (Percent)
6.0
5.5
5.0
4.5
4.0
3.5 4
3.0 +
2.5
2.0
0
Money Demand
0.1
+
0.3
0.2
Money Supply
0.4
0.5
MONEY (Trillions of dollars)
0.6
0.7
4
0.8
A
New MS Curve
++
New Equilibrium
Suppose the Fed announces that it is lowering its target interest rate by 75 basis points, or 0.75 percentage points. To do this, the Fed will use open-
market operations to
the public.
the
money by

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