When a Demand Shock Occurs in the Short Run, Monetary

question 45

True/False

When a demand shock occurs in the short run, monetary policy may focus on either output or income, since the effect is the same as focusing on price stability.

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Definitions:

Present Value

The present value of an anticipated amount of money or sequence of financial inflows, discounted by a particular return rate.

Payments

Amounts of money that are paid or due to be paid by one party to another for goods provided, services rendered, or debt obligations.

Compounded Quarterly

The process of calculating interest on a principal amount at a specified interest rate, with the interest being added to the principal at the end of every three months.

End-Of-Quarter Payments

Payments that are made at the end of each quarter, typically in a financial or leasing agreement.