The Fed is considering two alternative monetary policies: (1) holding the money supply constant and letting the interest rate adjust, and (2) adjusting the money supply to hold the interest rate constant. Using the IS‐LM model, determine which policy will better stabilize output under different economic shocks.

Answerdiscriminant validity;

This seems to be true.

Answerunilateral contract;

With reference to the solutions, following things may be noted1) homogeneous solutions comprises of single phase.2) heterogeneous solution comprises of more than one phase.3) in colloidal solution, solute is evenly distributed in solvent. in such system, it is difficult to separate solute and solvent.4) in suspension, there is an uneven distribution of solute in solvent. in such system, solute and solvent gets separated on standing long.    blood is a homogeneous and colloidal solution,salad dressing is a heterogeneous and suspension solution.