[Assume that the following two events occur at approximately the same time: I Consumer spending and business investment accelerates, resulting in an...

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[Assume that the following two events occur at approximately the same time: I Consumer spending and business investment accelerates, resulting inan increase in new loan applications. I The US. Federal Reserve Bank buys $XYZ billion in US. Treasurysecurities as part of its open market operations. A. Explain how each event, individually, will affect the equilibrium level ofinterest rates and the amount of borrowing and lending activity in US.capital markets. B. Explain how the two events, combined, will affect the equilibrium level ofinterest rates and the amount of borrowing and lending activity in US. capital markets. C. Assume that the increase in consumer and business spending happenedfirst, and was then followed by the Fed’s purchase of US. TreasurySecurities. Based upon the (obviously limited) information you have beengiven, did the Fed make the correct decision? Be specific! Note: Youshould identify the likely positive or negative result of the Fed’s decision(this question does not require a long answer). D. Assume that the Fed’s purchase of US. Treasury Securities happenedfirst, and was then followed by the increase in consumer and businessspending. Based upon the (obviously limited) information you have beengiven, did the Fed make the correct decision? Be specific! Note: Youshould identify the likely positive or negative result of the Fed’s decision(this question does not require a long answer).