Round 4: 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 (10[1])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 Friedman’s k-percent rule. (10[1])This quantity (-5[1])can be divided into M0 through M3, with the “zero-maturity” (10[2])type measuring assets redeemable on demand. Reserve banks like the Fed control this quantity by buying (-5[1])or (-5[1])selling bonds (10[1]-5[1])to counter inflation. For 10 points, name this amount of circulating currency (10[1])available in a market. ■END■ (10[1]0[2])

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Summary