J. Now add heterogeneity and rigidity. Add a random term to each firm's demand, and a random term to the bargaining equation. Modern computer industry. Plenty of cases of zero inflation or mild deflation coupled with low unemployment, as commentators point out. An Abbreviated Monetary History, 1914-1941 A. Friedman and Schwartz have probably made the most influential case for the view that nominal factors have real effects.
Monetary policy is extremely expansionary during the war years as both nominal and real output rise.
These will be explored in more detail towards the end of the semester. The monetary base falls first, but not by that much. Almost all of the decline in the money supply ultimately resulted from a fall in the money multiplier, not the monetary base. Nevertheless, the monetary base fell first , and initially it fell by more in percent terms than M2. Most of the monetary contraction did not happen for over two years.