Assume that the following conditions​ exist:
a. All banks are fully loaned​ up- there are no excess​reserves, and desired excess reserves are always zero.
b.
The money multiplier is
77.
   
c. The planned investment schedule is such that at a 4 percentrate of​ interest, Investment
​=$14501450
billion. At 5​ percent, investment is
​$14201420
billion.
d. The investment multiplier is
44.
e..
The initial equilibrium level of real GDP is
​$1313
trillion.
f. The equilibrium rate of interest is 4 percent
Now the Fed engages in contractionary monetary policy. Itsells
​$22
billion worth of​ bonds, which reduces the money​ supply, whichin turn raises the market rate of interest by 1 percentagepoint.
Calculate the decrease in money supply after​ FED's sale of​bonds: ____billion
Equilibrium GPC decreases by: _____ billion
Calculate the new equilibrium level of real GPC ___ trillion
