The power of a central bank is based on its monopoly over the issuance of currency. Economics teaches us that monopolies are bad and competition is...

Consider a situation where central bank officials repeatedly express concern that output exceeds potential output, implying that the economy is overheating.  Although they haven’t implemented any policy moves as yet, the data show that consumption of luxury goods has begun to slow. Explain how this behavior could reflect the asset-price channel of monetary policy at work.