Why does the Fed pursue price stability as its ultimate goal?
2) Describe how open market operations change the quantity of money.
3) Does an open market operation in which the Fed buys securities from the general public decrease or increase the banking system's reserves?
4) Suppose in the money market the equilibrium interest rate is 5 percent and quantity of money demanded and supplied are both equal to $2 trillion dollars. If the Fed increases the quantity of money, what is the effect on the interest rate?
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