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Answer:
Explanation:
When the Fed increases the money supply faster than the economy is growing, inflation occurs. In this situation, the increase in money circulating in an economy is higher than the increase in goods produced. There is now more money chasing not as many goods in this economy.
According to many theories of macroeconomics, an increase in the supply of money should lower interest rates in the economy. An increase in the money supply means that more money is available for borrowing in the economy.
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