Round 5: Tossup 6

The dynamics explaining why exogenous policy can only affect this quantity in one direction are described as “pushing on a string.” Thomas Sargent and Neil Wallace outlined an “optimal rule” for this quantity through an ad hoc model with long-run neutrality. This quantity plus government bonds, divided by the price level, leads to increased consumption in the Pigou effect. This quantity should always be increased by a fixed percentage, per Milton (-5[1])Friedman’s k-percent (10[1])rule. This quantity can be divided into M0 through (10[1])M3, with the “zero-maturity” type measuring assets redeemable on demand. Reserve banks like the Fed control this quantity by buying or selling bonds to counter inflation. For 10 points, name this amount of circulating currency available in a market. ■END■ (10[1])

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