Why Is It Difficult for Policy Makers to Rely on the Theoretical

question 64

Multiple Choice

Why is it difficult for policy makers to rely on the theoretical discussion of the money multiplier to target the money supply?

• A)The equation of exchange has been proven to be wrong.
• B)The use of quantitative easing has made it impossible to accurately determine the money supply.
• C)The amount of excess reserves and cash in the system varies.
• D)There is no good measure of reserves in the economy.

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