Why may an expansion of the money supply have a relatively small effect on national income? Why may any effect be hard to predict?
Answer to relevant QuestionsWhy does the exchange rate transmission mechanism strengthen the interest rate transmission mechanism?Using ISLM analysis, explain what would cause the aggregate demand curve to be steep.Why is it difficult to use fiscal policy to ‘fine tune’ the economy?How would you attempt to assess whether a particular period of inflation was the result of cost-push or demand-pull pressures?What determines the rate of depreciation? What would happen if the rate of depreciation fell?
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