Exercise 6. Insert the following words in the appropriate space: bonds commercial monetarist prices tight velocity Following the (1) .... argument that the average level of (2) "........ and wages is determined by the amount of money in circulation, and its (3)...... of circulation, many central banks now set money supply targets. By increasing or decreasing the money supply, the central bank indirectly influences interest rates, demand, output, growth, unemployment and prices. The central bank can reduce the reserves available to (4) banks by changing the reserve requirements. This reduces the amount of money that banks can create and makes money (5)... or scarce. Alternatively, the central bank can engage in what are called open market operations, which involve selling short- term government (6) (such as three-month Treasury bills) to the commercial banks, or buying them back