A) Monetary Transmission Mechanism: According to the Keynesian school, show what

Question

A) Monetary Transmission Mechanism: According to the Keynesian school, show what happens, step by step, when the Federal Reserve sells US treasury bills to US banks.

i) Show the impact in the Money Market

            ii) Show the impact in the Keynesian Cross Diagram

            iii) Show the impact in the IS-LM graph

            iv) Show the impact in the AD/AS graph

(B) What is the difference between the Keynesian view and Monetarist/Rational Expectations view on the short run and long run effects of discretionary monetary policy? What does this imply about the slope of the AS curve between these two schools of thought?

Explanation / Answer

I hope this will help you http://www.google.com/url?q=https://www.resbank.co.za/MonetaryPolicy/MonetaryPolicyOperations/Pages/Monetary-Policy-Transmission-Mechanism.aspx&sa=U&ei=AQmAVLTbN8qF8gW0sYGgCQ&ved=0CCkQFjAG&usg=AFQjCNFWxYpBZM13woDbYfXAJ08m4GJbmg

https://www.ecb.europa.eu/mopo/intro/transmission/html/index.en.html

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