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ECON 1110 Problem Set 10

ECON 1110 Problem Set 10 - 3 Briefly discuss how a modern...

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ECON 1110 Intermediate Macroeconomics Problem Set 10 Spring 2011 1. Compare and contrast the role of money in the monetarist and early Keynesian systems. Discuss the effects of money on output, the role of monetary policy, the stability of money demand, and the slope of the LM curve 2. Compare and contrast monetarist and modern Keynesian views of the conduct of monetary policy. Explain the reasons why monetarists support policy rules while Keynesians support policy activism. Use graphs to support your answer.
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Unformatted text preview: 3. Briefly discuss how a modern quantity theorist differs from a Keynesian. 4. How does the Friedman quantity theory differ from the classical quantity theory? 5. Analyse the effects of a decrease in taxes in the monetarist framework. How are the equilibrium levels of income and the interest rate affected by the tax cut? Analyse the cases in which the deficit is financed by a) issuing government bonds and b) printing more money. Compare these situations to the modern Keynesian model....
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