The following citation is from the Wall Street Journal article "Low Inflation Poses a Growth Test." (http://goo.gl/LatY8B)
"Consumer prices fell 0.4% in April,the second straight month of declines,the Labor Department said Thursday.Over the past year,prices have risen just 1.7%,omitting food and energy,below the roughly 2% level that Federal Reserve officials consider healthy for the economy.While tame inflation is good news for consumers,it also reflects the considerable slack in the economy: including factories with spare capacity that isn't being used and the nearly 12 million Americans who are looking for work but can't find it.The slowing price growth: and the risk of deflation,however small: gives the Federal Reserve more room to continue its easy-money policy,designed to boost growth.The Fed could also increase the amount of bonds it is buying to help push more money into the economy and perhaps lift inflation toward its target."
a. What does the quantity theory of money predict about prices when the central bank increases the money supply? Does the reality described in the article confirm this prediction?
a.k.a. "easy money," fail to increase inflation?
b. In the author's opinion, why do the expansionary monetary policies pursued by the central bank,
c. What does the reality of "easy money-low inflation" suggest about the shape of the short-run aggregate-supply curve? Does such a shape of the short-run aggregate-supply curve explain the evidence of low inflation and low employment?

Question

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The Answer of The following citation is from the Wall Street Journal article "Low Inflation Poses a Growth Test." (http://goo.gl/LatY8B)
"Consumer prices fell 0.4% in April,the second straight month of declines,the Labor Department said Thursday.Over the past year,prices have risen just 1.7%,omitting food and energy,below the roughly 2% level that Federal Reserve officials consider healthy for the economy.While tame inflation is good news for consumers,it also reflects the considerable slack in the economy: including factories with spare capacity that isn't being used and the nearly 12 million Americans who are looking for work but can't find it.The slowing price growth: and the risk of deflation,however small: gives the Federal Reserve more room to continue its easy-money policy,designed to boost growth.The Fed could also increase the amount of bonds it is buying to help push more money into the economy and perhaps lift inflation toward its target."
a. What does the quantity theory of money predict about prices when the central bank increases the money supply? Does the reality described in the article confirm this prediction?
a.k.a. "easy money," fail to increase inflation?
b. In the author's opinion, why do the expansionary monetary policies pursued by the central bank,
c. What does the reality of "easy money-low inflation" suggest about the shape of the short-run aggregate-supply curve? Does such a shape of the short-run aggregate-supply curve explain the evidence of low inflation and low employment?

The Following Citation Is from the Wall Street Journal Article