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Explain and demonstrate graphically that if the central bank pursues targeting a monetary aggregate, it is likely to lose control over the interest rate.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 1CQQ

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1. Explain and demonstrate graphically that if the central bank pursues targeting a monetary aggregate, it is likely to lose control over the interest rate. Include correctly labeled diagrams in explaining your answers.

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