Congress and the president raise income taxes while at the same time the Fed increases the...

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Congress and the president raise income taxes while at the same time the Fed increases the money supply. The initial equilibrium in the money market, prior to any such policy change, occurs where the vertical money supply curve intersects the downward-sloping money demand curve. A possible impact of higher taxes is that it causes the A possible impact of the expansionary monetary policy is that it causes the curve to shift curve to shift Congress and the president raise income taxes while at the same time the Fed increases the money supply. The initial equilibrium in the money market, prior to any such policy change, occurs where the vertical money supply curve intersects the downward-sloping money demand curve. A possible impact of higher taxes is that it causes the A possible impact of the expansionary monetary policy is that it causes the curve to shift curve to shift

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