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Let's examine how the goals of a bank influences its response to economic shocks in general. Suppose central bank A cares only about keeping the
Let's examine how the goals of a bank influences its response to economic shocks in general. Suppose central bank A cares only about keeping the price level stable, and central bank B cares only about keeping output and employment at their natural rates. Explain how each central bank would respond to
- An exogenous decrease in the velocity of money.
- An exogenous increase in the price of oil.
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