Problem
Pegging Interest Rates. Suppose the Federal Reserve wanted to fix, or peg, the level of interest rates at 6 percent per year. Using a simple demandand-supply graph, show how increases in money demand would change the supply of money if the Federal Reserve pursued the policy of this fixed interest rate. Use your answer to explain this statement: If the Federal Reserve pegs interest rates, it loses control of the money supply.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.