Answer Happy

Use the following diagram to answer Q21 and Q22. Money Money Supply Supply Value of money, 1/P MS MS₂ 1/P1 1/P2 MD 5000 $950 Quantity of Money, M (billions of dollars) In the conduct of U.S. monetary policy, ceteris paribus, which of the following activities by the Fed would be most consistent with the shift in the diagram above? O a. an increase in the Fed's Discount Rate Ob. an increase in the interest rate the Fed pays on bank reserves held at the Fed O c. an open market purchase an increase in the required reserve ratio O
Suppose you were told that in the long run "money is neutral." Ceteris paribus, it follows that the diagram above illustrates: O a the short-run impact of an open market sale by the Fed. Ob the short-run impact of an open market purchase by the Fed O c. the long-run impact of an open market sale by the Fed Od the long-run impact of an open market purchase by the Fed