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Chapter 26
Central Banking
and Monetary Policy
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T-191
Figure 26-1
A Bird’s-Eye View of How Monetary
Policy Affects Output and Inflation
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The Major Players
in Monetary Policy
T-192
Figure 26-2
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While the Fed Ultimately Pursues Objectives
like Stable Prices,Its Short-Term Operations
Focus on the Intermediate Targets
T-193
Figure 26-3
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Federal Reserve Determines
Federal Funds Rate
T-194
Figure 26-4
Source,Federal Reserve Board
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The Money Market
T-195
Figure 26-5
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Changes in Monetary Policy or
Prices Affect Interest Rates
T-196
Figure 26-6
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Central Bank Determines the Money Supply,
Changing Interest Rates and Investment,
Thereby Affecting GDP
T-197
Figure 26-7
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An Expansionary Monetary Policy Shifts AD
Curve to the Right,Raising Output and Prices
T-198
Figure 26-8