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QUESTION

ederal Reserve were to target the price level, so that P t = P , how would money supply change if productivity ( A t ) suddenly increased temporarily?...

If the Federal Reserve were to target the price level, so that Pt = P, how would money supply change if productivity (At) suddenly increased temporarily? Reason though what happens to macroeconomic aggregates such as Yt, Lt, effective Kt (such as through changed capital utilization), and how they cause the central bank to change money supply Mt to keep Pt constant.

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