José Antonio Rugel 01/17/22 Homework 1. Suppose there is a reduction in aggregate real money demand, that is, a negative shift in the aggregate real money demand function. Explain the short-run and...

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José Antonio Rugel01/17/22 Homework 1. Suppose there is a reduction in aggregate real money demand, that is, a negative shift in the aggregate real money demand function. Explain the short-run and long-run effects on the exchange rate, interest rate, and price level. In the short​ run, the interest rate will​ fall, the expected return on foreign currency will​ increase, which results in a depreciation of the domestic currency. In the long​ run, the price level will rise to equate money demand with money supply at the initial interest rate. 2. Read the following article: https://libertystreeteconomics.newyorkfed.org/2012/04/corridors-and-floors-in-monetary-policy/ 3. Read the following academic article and develop 2 questions to ask the author. · Could bank reserves surplus can affect other aspects of the US’s economy? · Should the US operating frameworks be changed from time to time, or does it depend on the financial conditions the country is going through?