Chapter 7 – The Asset Market, Money, and Prices

We know from our money supply discussions and especially money supply problem #1, that the real money supply will shift to the left, exacerbating the increase in interest rates due to the two portfolio shocks to money demand. In summary, the Fed was facing an increase in money demand and a decrease in money supply during the fall of 2008, both of which will increase the real rate – to offset ... ................
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