If policy makers target a specific price level, then:
A)the money supply becomes exogenous in the model.
B)the money supply becomes predetermined in the model.
C)the money supply becomes endogenous in the model.
D)the money supply becomes neutral in the model.

Question

Quizplus · Accepted Answer

When policymakers target a specific price level, they adjust the money supply as needed to achieve that target, making the money supply endogenous (dependent on the state of the economy) in the model.

If Policy Makers Target a Specific Price Level, Then