a. If newspapers and magazines report a lot of good news about the economy, what is likely to happen to velocity?

b. If the Federal Reserve wants to keep aggregate demand (i.e., spending growth)

stable, what will it do to the growth rate of the money supply when a lot of good news comes out about the economy: increase it, decrease it, or leave it unchanged? (Hint:

In practice, central bankers often call this

“leaning against the wind.”) : lop1