Homework answers / question archive / 1)Which of the following historical facts of monetary policy indicates that reverse causation alone cannot explain the entire relationship between money and output?                 Consider a permanent increase in government purchases of 100 per year (in real terms)

1)Which of the following historical facts of monetary policy indicates that reverse causation alone cannot explain the entire relationship between money and output?                 Consider a permanent increase in government purchases of 100 per year (in real terms)

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1)Which of the following historical facts of monetary policy indicates that reverse causation alone cannot explain the entire relationship between money and output?

2. Consider a permanent increase in government purchases of 100 per year (in real terms).  The increase I purchases is financed by a permanent increase in lump-sum taxes of 100 per year.