Contrast the short-run effects of an increase in the money supply on the interest rate to the
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Contrast the short-run effects of an increase in the money supply on the interest rate to the long-run effects of an increase in the money supply on the interest rate. Which market determines the interest rate in the short run? Which market does so in the long run? What are the implications of your answers for the effectiveness of monetary policy in influencing real GDP in the short run and the long run?
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In the short run the interest rate is determined in the money market the shortrun equilibrium intere...View the full answer
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Related Book For
Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson
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