Suppose that the Federal Reserve wishes to keep the nominal interest rate at a target level of

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Suppose that the Federal Reserve wishes to keep the nominal interest rate at a target level of 4 percent. Draw a money supply and demand diagram in which the current equilibrium interest rate is 4 percent. Explain a specific policy action, except for a change in the interest rate paid on reserves, that the Fed could take to keep the interest rate at its target level if the demand for money suddenly declines.
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Economics Today

ISBN: 978-0132554619

16th edition

Authors: Roger LeRoy Miller

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