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3. The Keynesian transmission mechanism Suppose the Federal Reserve shifts to an expansionary monetary policy by buying bondsAdjust the following graph to show the effect of the Feds expansionary monetary policy. 18 15 D Çodo INTEREST RATE D 3 0 0 1The following graph shows the demand for investment. Show the short-run effect of the Feds expansionary monetary policy by sThe following graph shows the aggregate demand (AD) and short-run aggregate supply (SRAS) curves in the goods and services maFill in the blanks to interpret the effect of the Feds policy. which causes When the Fed buys bonds, the amount of money inStarting from the top drop down questions:

1. Fall / rise

2. 18% / 12% / 3% / 9% / 6% / 15 %

3. increase / decrease

4. up / down

5. more / less

6. an increase / no change / a decrease

7. an increase / no change / a decrease

8. an increase / no change / a decrease

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Answer #1

Of all :06% S i S(New) increases (Money supply 900 1200 ។ (There is a movement. along the downward direction which increasy i

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