Part 2: Short Answers 40 points I- List and discuss three...

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Financial Markets and Institutions
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Chapter 3 / Exercise 13
Financial Markets and Institutions
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1 Name: Intermediate Macroeconomics Practice Midterm 2 Please put all papers away and breathe deeply. No calculators, no cell phones, no computers: nothing electronic is allowed. There are 50 points on the exam. Part 1: Definitions (2 points each) 1) Monetarism: 2) Automatic Stabilizers: 3) Information Lag: 4) Monetary Neutrality: 5) Taylor rule:
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Financial Markets and Institutions
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Chapter 3 / Exercise 13
Financial Markets and Institutions
Madura
Expert Verified
2 Part 2: Short Answers (40 points) I- List and discuss three practical problems faced by policymakers trying to stabilize the economy ( other than lags ). (5 points) II- Why did Milton Friedman argue that inflation was always and everywhere a monetary phenomenon? (5 points)
3 III- Why might a government want to hire a central banker that does not care about fluctuations in the unemployment rate? Explain intuitively. (5 points) IV- Derive the Fisher equation. Explain intuitively what it means and where it comes from. (5 points)
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