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M & B 4th Edition by Dean Croushore
Edition 4ISBN: 978-1111823351M & B 4th Edition by Dean Croushore
Edition 4ISBN: 978-1111823351 Exercise 1
Suppose that the money-demand equation is :
Suppose initially that P = 1, Y = 7,000, and i = 5. If Y falls to 6,500 and the price level does not change, by how much should the Fed change the money supply if it wants to keep the nominal interest rate unchanged? Should the money supply rise or fall, and by how much? Use the liquidity-preference framework.
Suppose initially that P = 1, Y = 7,000, and i = 5. If Y falls to 6,500 and the price level does not change, by how much should the Fed change the money supply if it wants to keep the nominal interest rate unchanged? Should the money supply rise or fall, and by how much? Use the liquidity-preference framework.
Explanation
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Under the liquidity preference framework...
M & B 4th Edition by Dean Croushore
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