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1 the central bank increases the reserve ratio in the

State and illustrate (show which curve(s) shift and in which direction) what happens to the value of money, the price level and real interest rates using the money supply (MS) and money demand (MD) diagram shown below for each of the following situations.

1. The Central Bank increases the reserve ratio in the fractional reserve banking system.

2. The Central Bank purchases government securities via Open Market Operations.

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