A. The main argument against monetary policy is that it affects only nominal variables, not real variables. Explain this argument using the two methods below.
I. Explain and show on a graph the short-run and long-run equilibrium changes in the AD/AS model from expansionary monetary policy. How does this support an anti-monetary policy stance?
II. Explain the equation of exchange. What do quantity theorists believe, and why don't they support monetary policy?