Price level and expected inflation effects

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M1 money growth in the U.S. was about 16% in 2008, 7% in 2009 and 9% in 2010. Over the same time period, the yield on 3-month T-bills fell from almost 3% to close to 0%. Given these high rates of money growth, why did the interest rates fall, rather than increase? What does this say about the income, price level and expected inflation effects? Draw a graph to illustrate all these effects.

Reference no: EM131083156

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