Please answer all parts of the question: Using the money market graph, work through the following:
A. The federal reserve had decided that unemployment is rising too sharply and wants to reserve this trend by expanding the money supply. What steps must the Fed take to expand money? What will be the impact of the money supply curve? What is the reaction in money market (in terms of the interest rate?)
B. As a result of a rapid economic expansion abroad, exports rise and real GDP increases. What happens to the demand for money? What is the impact on the market interest rate?