Question

does monetary policy shock mean real or nominal shocks?
does it mean either?

Answer 1

Ans:-A monetary policy shock happen when a central bank change its arrangement of interest rate or money supply regulation without adequate warning.A monetary policy shock is a sudden change of government expenditure or taxation amount.The monetary policy shock are either nominal shock or real shock.The real and nominal shock have different result on an economy .The real shock may influence the long run level of real GDP,which is not a big impact on the business cycle.But the nominal shock powerfully influence the business cycle,without expressively affecting the long run level of real GDP.