Question

Monetary Policy and Money Markets

a. Graph the demand and supply of money at equilibrium. Identify the area of excess supply of money and excess demand for money.

b.Graph the impact of contractionary monetary policy on Aggregate Demand through monetary policy transmission into the economy- use 3 graphs to illustrate the impact. Graph and list all contractionary monetary policy.

c. Explain the transmission of expansionary monetary policy transmission and list all expansionary monetary policy tools

d. Define the equation of exchange. What level of the money supply will sustain Nominal GDP of $143 bill when velocity =3? ( round to 1 one decimal place)

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