Ec102_01__-_Ch_11_Inflation_Its_Causes_a - 1 1 ....

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0ddcf919d3a1e193e1acae07a9880855e5bd205a.doc 1 1. Suppose Bank of Canada sells government bonds. Use a graph of the money market to  show what this does to the value of money. 2. Using separate graphs, demonstrate what happens to the money supply, money demand,  the value of money, and the price level if: a. The Bank of Canada increases the money supply. b. People decide to demand less money at each value of money. 3. According to the classical dichotomy, what changes nominal variables? What changes real  variables? 4. Suppose that monetary neutrality holds. Of the following variables, which ones do not  change when the money supply increases? 5. Identify each of the following as nominal or real variables. The physical output of goods and services The overall price level The dollar price of apples The price of apples relative to the price of oranges The unemployment rate
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This note was uploaded on 11/25/2010 for the course ECON 102 taught by Professor ? during the Spring '08 term at Waterloo.

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Ec102_01__-_Ch_11_Inflation_Its_Causes_a - 1 1 ....

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