Homework: Monetary Policy and Macroeconomy
In a 2 to 3 pages paper (not including title and references pages), answer the question "How does monetary policy affect the macroeconomy?" In your answer, include the following:
1. Explain the fundamentals behind why changes in the money supply have real effects on the economy and the monetary transmission mechanism.
2. Explain how monetary policy can be used to effectively stabilize output and smooth business cycles.
3. Evaluate the role of monetary policy and how it affects the macroeconomy given the implications of the financial accelerator.
Format your homework according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.