The Economics of Money, Banking and Financial Markets 4th Edition by Frederic Mishkin

Exercise 22

For each of the following shocks, describe how monetary policymakers would respond (if at all) to stabilize economic activity. Assume the economy starts at a long-run equilibrium.
a. Consumers reduce autonomous consumption.
b. Financial frictions decrease.
c. Government spending increases.
d. Taxes increase.
e. The domestic currency appreciates.