Round 3: 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 rule. (10[1])This quantity can be divided into M0 through M3, (10[2])with the “zero-maturity” type (10[1])measuring (10[1])assets (-5[1])redeemable on demand. Reserve banks like the Fed (10[1])control this quantity by buying or selling bonds to counter (10[1])inflation. For 10 points, name this amount of circulating currency available in a market. (10[1])■END■

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