Goods Market: C=225 + 1/2(Y-T) I=240-400r G=125
Money Market: Money Supply=490 L(r,y)=(1/2)Y-100r Long-Term Inflation: 2% Natural Rate of Unemployment: 5%
the there is an increased risk of the stock market changing the Money Demand by 25 regardless of Y or r.
Extra Credit: Prior to the Great Recession, which famous economist infamously claimed that the Federal Reserve understood monetary policy so much there would never be another phenomenon such as the Great Depression. Provide documentation—website etc.—of this.
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