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QUESTION
(a) (i) Define the velocity of circulation of money.
(ii) By comparing the Fischer's Quantity Theory of money and Keyne's Liquidity Preference Framework, explain clearly how velocity of circulation of money is differentiated in the models.
(b) State whether the following statements are TRUE or FALSE.
Give clear and detailed justification of your answer.
(i) Money is the most liquid store of value.
(ii) The Central Bank should implement an expansionary monetary policy in periods of recession.
(iii) The traditional interest rate channel of transmission of monetary policy is always efficient.
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