The main argument against monetary policy

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A. The main argument against monetary policy is that it affects only nominal variables, not real variables. Explain this argument using the two methods below.

I. Explain and show on a graph the short-run and long-run equilibrium changes in the AD/AS model from expansionary monetary policy. How does this support an anti-monetary policy stance?

II. Explain the equation of exchange. What do quantity theorists believe, and why don't they support monetary policy?

Reference no: EM13994519

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