# 25. When he was the U.S. Federal Reserve Ben Bernanke said that financial innova man, tion...

###### Question:

25. When he was the U.S. Federal Reserve Ben Bernanke said that financial innova man, tion and the spread of U.S. curre the world had broken down the relationships between money, inflation, and output growth which made monetary aggregates less useful gauges for policy makers. Some other central banks use monetary aggregates as a guide to pol icy decisions, but Bernanke believed reliance monetary aggregates would be unwise. He said that there are differences between the United States and money demand. a. Explain how the debate surrounding the quan Europe in terms of the stability of tity theory of money could make "monetary gauges a less useful tool for policy makers." b. What do Ben Bernanke's statements reveal about his view on the accuracy of the quantity theory of money?

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