The following data describe the current conditions in the Money Market
Amount of Money Supplied $100 billion $200 billion $300 billion $400 billion $500 billion $600 billion $700 billion
Interest Rate 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 2.0%
(a) What happens in this economy if the Amount of Money Supplied increased from $300 billion to $400 billion dollars?
(b) Why would the Central Bank engage in the policy described in (a) above?
(c) What happens in this economy if the Amount of Money Supplied increased from $600 billion to $700 billion dollars?
(d) Describe the effectiveness of Monetary Policy if the Amount of Money Supplied increased from $600 billion to $700 billion dollars