Consider a central bank that chooses to implement its monetary policy by expanding the money supply by a fixed percentage amount in every year.One important disadvantage with this approach to monetary policy is that it may

Question

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If the demand for money is unstable, a fixed expansion of the money supply could lead to economic instability, as the supply may not match the fluctuating demand, causing inflation or deflation.

Consider a Central Bank That Chooses to Implement Its Monetary