Suppose that Turkey experiences a shock that exogenously increases money demand. (Note, this is an exogenous shift in money demand, not an endogenous response to some other variable in the money demand function.) Study how this shock can cause a recession, and how policy makers can respond to it. Assume a flexible exchange rate.
Suppose that monetary policy is used as stabilization policy, which maintains the level of output at its initial value despite the money demand shock.
