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Implementing a contractionary monetary policy

Question: Which statement is true when the fed is implementing a contractionary monetary policy?

1. fed decreases money supply in economy by increasing federal funds rate; or

2. fed increases federal funds rate by decreasing money supply in economy

if 1, fully and precisely explain how federal funds rate is set by fed

if 2, fully, precisely explain how money supply is decreased by fed

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Microeconomics: Implementing a contractionary monetary policy

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Microeconomics: Implementing a contractionary monetary policy

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