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Assignment help 2054


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Assume the economy is operating at the full-employment level of output.

The Federal Reserve decides to decrease the discount rate. Explain how each of the following is impacted as a result of the Fed’s action:

Nominal interest rates

Aggregate demand

Price level

Assume the Fed’s action is successful in changing the economy. Using a correctly drawn and labeled Phillips curve, show and explain how this policy will affect each of the following as the economy approaches a new equilibrium:

the Phillips curve

the natural rate of unemployment


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