Given the Equation of Exchange, MV = PY, When Central

question 62

Multiple Choice

Given the equation of exchange, MV = PY, when central bankers control short-term nominal interest rates by adjusting the level of reserves in the banking system, their actions are expected to primarily affect:

• A) the rate of growth of V.
• B) the value of V.
• C) potential Y as opposed to current Y.
• D) the rate of growth of M.

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