When a demand shock occurs in the short run, monetary policy may focus on either output or income, since the effect is the same as focusing on price stability.

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When a demand shock occurs in the short run, monetary policy may focus on either output or income, as both are indicators of the overall health of the economy. The ultimate goal of monetary policy is to promote price stability, but in the short run, focusing on output or income can also help to mitigate the effects of a demand shock.

When a Demand Shock Occurs in the Short Run, Monetary