Explain why this monetary policy has not yielded any results

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Reference no: EM131090743

Suppose a central bank has increased its nation's nominal money supply considerably for several years in a row, but without any increase in inflation. Over the same time, suppose its economy has not grown. Given this information, explain why this monetary policy has not yielded any results. Use the aggregate demand/aggregate supply (AD/AS) model to aid in your answer, and assume the economy is in a long-term equilibrium as your starting point. A good approach would be to compare what is supposed to happen to AD when the Fed conducts expansionary monetary policy to this situation.

Reference no: EM131090743

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