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Author Question: The following diagram shows the demand for and supply of money. The equilibrium quantity of money is ... (Read 93 times)

sheilaspns

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on: May 25, 2020
The following diagram shows the demand for and supply of money. The equilibrium quantity of money is initially Q1 and the equilibrium interest rate is r1.



Assuming that a central bank wishes to tighten monetary policy in order to reduce inflation, which of the following would NOT be appropriate?
◦ Keep interest rates at r1 and keep the money supply curve at Ms but ration credit.
◦ Keep interest rates at r1 and reduce the money supply to Q2 and also ration credit.
◦ Reduce the money supply (e.g. from Q1 to Q2) by taking action to shift the money supply curve to the left. In so doing, it must allow interest rates to rise if it is to avoid credit rationing.
◦ Raise the interest rate to r2 and then reduce the money supply to Q2 and not introduce any form of credit rationing.
Essential Economics for Business ¦ Sloman, Jones ¦ 5th Edition
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Marked as best answer by sheilaspns on May 25, 2020

Kaytorgator

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Reply #1 on: May 25, 2020
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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sheilaspns

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Reply 2 on: May 25, 2020
:D TYSM

covalentbond

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Reply 3 on: Yesterday
Wow, this really help

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