Now assume that the Fed decreases the money supply and financial markets believe the decrease will be permanent. Assume that prices are sticky in the… | Cheap Nursing Papers

Now assume that the Fed decreases the money supply and financial markets believe the decrease will be permanent. Assume that prices are sticky in the…

Now assume that the Fed decreases the money supply and financial markets believe the decrease will be permanent. Assume that prices are sticky in the short run. What will be the short run effect on US interest rates, US prices, UK interest rates, and the dollar price of a pound (E$ £)?  Use well labeled diagrams of the US money market and foreign exchange market to explain your answer.   

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