7. Suppose the central bank expands the money supply, but because the public expects this action, it

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7. Suppose the central bank expands the money supply, but because the public expects this action, it simultaneously raises its expectation of the price level. What will happen to output and the price level in the short run? Compare this result to the outcome if the central bank expanded the money supply but the public didn’t change its expectation of the price level.

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Business Economics

ISBN: 388402

2nd Edition

Authors: Mark P. Taylor, Andrew Ashwin, N. Gregory Mankiw

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