Question: Explain what the Fed should do to remove an inflationary gap. Illustrate the effect of its policy with an AD/SRAS/LRAS graph. Make sure to mention

Explain what the Fed should do to remove an inflationary gap. Illustrate the effect of its policy with an AD/SRAS/LRAS graph. Make sure to mention all the tools of monetary policy.

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To remove an inflationary gap the Federal Reserve the Fed can implement contractionary monetary policy measures These measures aim to reduce the level ... View full answer

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