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 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 (10[1]-5[2])rule. This quantity (-5[1])can be divided into M0 through M3, (10[1])with the (10[1])“zero-maturity” type (10[1])measuring assets redeemable on demand. (10[1])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[3])

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