Q. 1. What change in the Federal funds rate would you recommend?
2. How would your recommended change get accomplished?
3. What impact would the actions have on the lending ability of the banking system, the real interest rate, investment spending, aggregate demand, and inflation?
4. Suppose there is an increase in AD (shifting out of aggregate demand due to increase in government expenditure as part of the stimulus project from the government):
5.How is this shifting of AD curve going to affect the price level and output level of the economy?
6.What would be the effect on the demand of money?