Interest Rate, i T Time The above figure shows how interest rates respond over time to an increased rate of money supply growth starting at
Interest Rate, i T Time The above figure shows how interest rates respond over time to an increased rate of money supply growth starting at time T. Answer the following questions about the figure.~ (a) In the above figure, is the liquidity effect larger than the other three effects, namely the income, price-level and expected-inflation effects? Is the adjustment speed of the expected- inflation fast or slow? Provide and explain your answer. (5 marks)
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