In one to two pages

1.Use the IS-LM model and graphical analysis to discuss the following. Make sure that you clearly label the axes, curves and equilibrium points in your diagrams. Explain your work. (a) In the late1980s many Central Banks reacted to increasing ináation by decreasing the money supply. How does this a§ect the IS-curve? How will it a§ect the LM curve? Describe the new economic equilibrium. (b) In Great Britain this was complemented by an restrictive Öscal policy. How does this a§ect the IS-curve? How will it a§ect the LM curve? Describe the new economic equilibrium, assuming that both the IS and LM curves have standard slopes. (c) Assume that investment is not very sensitive to changes in the interest rate. Would this have made a di§erence to your answers to part (a) and (b) of this question?

In around 200 words

2. The renaissance of classical macroeconomics. Write a short essay discussing the rise of classical macroeconomics after ca. 1970. Give an overview of the emerging new classical schools of thoughts, their essential theoretical arguments and their main disagreements with Keynesian economics.

In around 200 words

3. Discuss the Quantity Theory of Money critically. Explain how classical theory interprets the quantity identity, how it relates to the classical theory of aggregate demand and what its key conclusions are. Explain how Keynesians would interpret the quantity equation and how they would criticise the Quantity Theory of Money.

Subject | General |

Due By (Pacific Time) | 04/27/2015 10:44 am |

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