Question

the economy is experiencing a recession and high unemployment a. Use an AD-AS model together with the Fed Funds market to represent ther short ran equilibrium in b. What types of monetary policy (i.e.. expansionary or restrictive) should the Fed implement? c. In implementing the policy you suggest. which actions (please give at least two actions) should the Fed take to achieve this policy? Explain how t he y policy would address this problem and the consequence of the monetar Fed's action(s)? Please include both the fed funds market and AD-AS diagram in your answer. In particular. please explain how your suggested monetary policy affects the fed funds market (with demand for and supply of the fed funds) and the AD-AS model in the short run?

Answer 1

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