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      Question

      Monetary policy affects the ________ and ________.

      A stock price, minimum wage Correct Answer Incorrect Answer
      B reserve, unemployment. Correct Answer Incorrect Answer
      C taxes, exchange rate Correct Answer Incorrect Answer
      D money supply, interest rate Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      Solution: monetary policy affects TFP, capital accumulation, and the productive capacity of the economy for a very long time. In response to an exogenous monetary shock, output declines and even twelve years out it has not returned to its pre-shock trend.

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