Assume the United States is operating below full employment.
- Identify one monetary policy tool that will solve the problem.
- Using a correctly drawn and labeled AD/AS graph and money market graph, show and explain how the policy you identified in (a) will affect each of the following in the short-run
Output and employment
price level
- Interest rates
- Explain how the policy you identified in (a) will affect each of the following
- International value of the dollar
- American exports (based on the changing value of the dollar)