If the Federal Reserve were to sell bonds, what would likely happen to the money supply and interest rates? Carefully Explain (the money market graph would help). Using the AS/AD model what do you predict will happen to the level of Real GDP and the Price level in the U.S. in the Short-Run and Long-Run? Carefully Explain (a graph would help).© BrainMass Inc. brainmass.com October 9, 2019, 9:32 pm ad1c9bdddf
By selling bonds the Fed causes interest rates to rise and the money supply to contract. Higher interest rates slow down the economy, by discouraging ...
This solution helps with a problem involving federal reserve and sale of bonds.