Tutorial 6_2011 - ECON1002 Introductory Macroeconomics, S1...

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ECON1002 Introductory Macroeconomics, S1 2011 Tutorial Tasks 1 Reading Guide: Review Chapters 9 and 10 of BOF as preparation for this tutorial. You should also look over your lectures notes for Weeks 5 and 6. Key Concepts: Bank creation of money; the Quantity Theory; Open market operations; The Reserve bank and interest rate targeting, Policy reaction function. R EVIEW OF C ONCEPTUAL U NDERSTANDING These are to be attempted before the tutorial. They will not normally be covered in the tutorial, maybe, except for a quick review, time permitting. The answers are typically found in the textbook and lecture notes. 1. Why is it important for the Quantity Theory that the velocity of circulation be constant? Is it likely that the velocity of circulation is constant? Explain. 2. What do you understand by the open market operations? 3. How is monetary policy conducted though setting interest rates? How is it different from conducting monetary policy through setting money supply? 4.
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This note was uploaded on 08/18/2011 for the course ECON 1002 taught by Professor Markmelatos during the Three '10 term at University of Sydney.

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Tutorial 6_2011 - ECON1002 Introductory Macroeconomics, S1...

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