E. Refer to your answer above. Which of the following would reduce the effectiveness of the Fed policy action form above? Quantitative easing ( Unpredictable changes in money velocity Interest rate sensitive investment Excess reserves held by banks Supply shock recession ) Long time lags 4. Refer to the quantity theory of money equation. (3 points) A. All other things being equal, by how much will nominal GDP expand if the central bank increases the money supply from $600 billion to $100 billion, and the velocity of money is 37 B. Suppose now that economists expect the velocity of money to increase by 50% as a result of the monetary stimulus. What will be the total increase in nominal GDP given the change in the money velocity? C.How the change in the money velocity affected the stimulus effect of the central bank policy action? Price Lovel LRAS DNS SRAS 0 AD AD DY Real GDP Recessionary gap Graph Al Graph B ) AS 22 ADI AD Realmatinal E. Refer to your answer above. Which of the following would reduce the effectiveness of the Fed policy action form above? Quantitative easing ( Unpredictable changes in money velocity Interest rate sensitive investment Excess reserves held by banks Supply shock recession ) Long time lags 4. Refer to the quantity theory of money equation. (3 points) A. All other things being equal, by how much will nominal GDP expand if the central bank increases the money supply from $600 billion to $100 billion, and the velocity of money is 37 B. Suppose now that economists expect the velocity of money to increase by 50% as a result of the monetary stimulus. What will be the total increase in nominal GDP given the change in the money velocity? C.How the change in the money velocity affected the stimulus effect of the central bank policy action? Price Lovel LRAS DNS SRAS 0 AD AD DY Real GDP Recessionary gap Graph Al Graph B ) AS 22 ADI AD Realmatinal