b. Explain in your own words using the loanable funds theory, how these actions in effect reduce the supply of loanable funds available in the economy, and contribute to a rise in the Fed Funds rate. 8. Module 3 [See Lecture Notes in the Module 3 81 QE Discussion Cafe}. a. Explain how quantitative easing (QE} was carried out by the US. Federal Reserve lUlpen Market Committee (FCIMC) in the years following the U.S. Subprime Crisis, including its use of lClperation Twist. In Europe, the European Central Bank is following a similar quantitative easing policy? What are some pros and cons for the European Central Bank to engage in this QE policy? (fine to look up and cite articles in the news or web for this questionbe sure to give references]. I). The Fed recently has sought to unwind its position by selling government securities to the nonbank public in return for funds from the non-bank public to reduce the money supply and increase the Fed Funds rate as a target rate. What are the pros and cons of this policy? What concerns does the Fed have to consider when it decides to do this (he. policy for a rise in rates}