Suppose the Federal Reserve is using an interest rate as a target, while real income is the

Question:

Suppose the Federal Reserve is using an interest rate as a target, while real income is the ultimate policy target, and there is an autonomous drop in business investment that the Federal Reserve had not predicted. Use the IS-LM model to show the effects of the shock. Would income have been affected less or more if the Federal Reserve had been using a money supply target?
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: