The Fed conducts an open market purchase of securities. Explain the effects of this action in the short run and the long run on:
a)The quantity of money
b)The quantity of money demanded
c)The nominal interest rate
d)The real interest rate
e)Real GDP
f)The price level
Take a shot, but do a little research first.
In the graph, money supply would shift the the right, and the aggregated demand would shift to right. If what I just said is right...
For short run:
a) increase
b) increase
c) decrease
d) decrease
e) increase
f) indrease
For long run:
d) the real interest rate would go back up to where it was since the money demanded would shift to the right.
f) price level would go back up since the aggregated supply would shift to the left.
I don't know if this is right. Can you please help me with this?
Thank you.
0 answers