The causes and persistence of inflation, Business Economics

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QUESTION

(a) Analyse the activist and non-activist policy makers' choice between implementing a policy rule or a discretionary monetary policy.

(b) Explain why the policy rule is not credible and discuss the solutions to overcome this problem.

QUESTION

Write detailed notes on any Two of the following:

(a) The equity price channel for transmission of monetary policy.

(b) The credit view.

(d) Friedman modern quantity theory and its empirical validity.

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