Business, 05.05.2020 19:32 matius0711

Suppose a huge increase in credit card frauds leads to many businesses refusing to accept payments by credit cards. As a result, people want to keep more cash on hand, increasing the demand for money. Assume the Fed does not change the money supply. According to the theory of liquidity preference, the interest rate will, which causes aggregate demand to. If instead the Fed wants to stabilize aggregate demand, it should the money supply by government bonds.

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Suppose a huge increase in credit card frauds leads to many businesses refusing to accept payments b...