Question: 1.Explain how monetary policy can be used to close the contractionary gap, inflationary gap, and and what are the different tools of monetary policy? 2.Explain

1.Explain how monetary policy can be used to close the contractionary gap, inflationary gap, and and what are the different tools of monetary policy?

2.Explain how interest rates and the price level canaffect the demand for money.

3.What is the equation of exchange? What are the variables, which are in it, and how do they relate to each other?

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