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-Refer to Figure

Question 49

Multiple Choice

-Refer to Figure. Assume the Fed is targeting a particular interest rate (i<sub>t</sub>) . If money demand increases from D to D', what must the Fed do to maintain the interest rate target? A) decrease money supply B) increase the interest rate C) increase the money supply D) The Fed cannot maintain it
-Refer to Figure. Assume the Fed is targeting a particular interest rate (it) . If money demand increases from D to D', what must the Fed do to maintain the interest rate target?


A) decrease money supply
B) increase the interest rate
C) increase the money supply
D) The Fed cannot maintain it

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