Answer the following three questions dealing with monetary policy. (a) Explain how the Federal Reserve might carry out a “tight” monetary policy.

Answer the following three questions dealing with monetary policy.

(a)  Explain how the Federal Reserve might carry out a “tight” monetary policy.

ANS:

(b)  Explain how the Federal Reserve might carry out an “easy” monetary policy.

ANS:

(c)  How would each of the policies affect the equilibrium interest rate?

ANS: