Econ402_Set5 - PS 5 Money and Transactions(60 raw points...

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PS 5 – Money and Transactions (60 raw points) ECON 402, Prof. Bachmann Due: March 3 Explain all your answers. “Results only” means partial credit only. Staple and write legibly. No spiral stuff. Write on the top of the front page of the assignment you hand in: name, section number, section time and section GSI. The numbers in brackets are the subdivision of raw points for each question. I) Changes in the Commodity Market and their Implications for the Money Market (20 raw points) Use the intertemporal general equilibrium model with money to answer the following three questions: 1) Suppose there is a positive (exogenous) increase in aggregate (output) demand for every real interest rate r , what will happen to the aggregate price level, P ? Can you answer this question unambiguously? (6) 2) Suppose there is a positive (exogenous) increase in aggregate (output) supply for every real interest rate r , what will happen to the aggregate price level, P ? Can you answer this question unambiguously? (6)
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This note was uploaded on 03/13/2009 for the course ECON 402 taught by Professor House during the Winter '08 term at University of Michigan.

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Econ402_Set5 - PS 5 Money and Transactions(60 raw points...

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