Question: Why might targeting the money supply lead to lower output
Why might targeting the money supply lead to lower output growth than targeting the rate of interest?.
Answer to relevant QuestionsWhich of the following factors would increase the transactions demand for money? Explain your choices.(a) Lower nominal interest rates.(b) Rumors that a computer virus had invaded the ATM network.(c) A fall in nominal income.Comment on the role given to money in the monetary policy strategy of the ECB. In Figure 20.1, which compares money growth and inflation over an extended time period, is Mexico a country above or below the 45oline? Plot since 1987 on a quarterly basis the percent change from a year ago of the consumer ...Suppose the real interest rate unexpectedly falls in the absence of other economic changes. What would you expect to happen to (a) Consumption,(b) Investment, and (c) Net exports? Suppose the economy is in short-run equilibrium at a level of output that exceeds potential output. How would the economy self-adjust to return to long-run equilibrium?
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