Question: 1. Explain how the Fed can increase the money supply by engaging in open-market operations. What role do banks play in this process? 2.

1. Explain how the Fed can increase the money supply by engaging

1. Explain how the Fed can increase the money supply by engaging in open-market operations. What role do banks play in this process? 2. What tools are available to a central bank when the economy is in a liquidity trap?

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