After reading this chapter, you should be able to

18.1 Discuss the interrelationships among the money supply, interest rates, and aggregate demand.

18.2 Explain how the Fed uses expansionary and contractionary monetary policy to help stabilize the economy.

18.3 Explain the long-run relationship between the growth rate of the money supply and the inflation rate.

18.4 Discuss the problems that arise when attempting to implement expansionary and contractionary fiscal and monetary policy.