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What actions should the Fed take if it believes the economy is about to experience a high rate of inflation? Now, let’s assume you are the President of the Fed and you have to make certain decisions in our economy. If the Fed orders a contractionary monetary policy, describe what will happen to the following variables relative to what would have happened without the policy:
The money supply
Interest rates
Investment
Consumption
Net Exports
The aggregate demand curve
Real GDP
The price level
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