Question: Effects of Monetary Policy: Consider question 1 again without any Government spending increase. In its next meeting, Central Bank is expected to reduce the reserve

Effects of Monetary Policy: Consider question 1 again without any Government spending increase. In its next meeting, Central Bank is expected to reduce the reserve requirement ratio(RRR). Interest rate is currently 8%. As a result of Central Bank's action, the interest rates will either drop by 1% or by 1.5% with a chance of 60% and 40% respectively

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