Task
The influence of QE on money supply
Use the data in Colum L, M, S, T and U only. This table will be referred to as Table 1 in the following task descriptions. Answer the questions below.
1. Which of the measures in Colum L, M, S, T and U is the most sensitive to (i.e. most directly influenced by) the QE? You should provide a theoretical justification instead of using the real data when answering this question.
2. Use the data in Table 1 to validate your justification provided in Part (a). You should make your own decision on how to display/visualise the changes of the measure(s).
3. Why are the changes of M2 during the period between March 2020 and December 2020 not in proportion to the changes of the measure you choose in Part (a)?
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