Given that the Fed has increased money supply considerably in the last few months (and, therefore, decreased
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Question:
Given that the Fed has increased money supply considerably in the last few months (and, therefore, decreased interest rates):
Part III: Use analysis to explain the impact on this policy in the long run, assuming that inflation increases. More specifically: (j) What are the effects of this policy in the long run on nominal interest rates, prices, and nominal output? And on real interest rates, investment, savings, consumption, and real output? (Hint: use Fisher equation and the Quantity Theory)
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