1. Within the ISLM model, i llustrate the conflict the Federal Reserve faces between trying to control the money supply and trying to achieve desirable interest-rate levels. 2. Explain the concept of...

1. Within the IS–LM model, i llustrate the conflict the Federal Reserve faces between trying to control the money supply and trying to achieve “desirable” interest-rate levels.

2. Explain the concept of open market operation. How would the federal funds rate be affected by a Federal Reserve purchase of securities in the open market? Would the rate rise or fall? Explain.