How easy it is for changes in money supply

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Q. effectiveness of monetary policy depends on how easy it is for changes in money supply to change interest rates. By changing interest rates, monetary policy affect investment spending and aggregate demand curve. Economies of Albernia and Brittania have very different money demand curves, as shown in accompanying diagram. In which economy will changes in money supply be a more effective policy tool? Why?

Reference no: EM1367868

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