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Complete all questions listed below. Clearly label your answers.




1. What impact will an unanticipated increase in the money supply have on the real interest;rate, real output, and employment in the short run? How will expansionary monetary;policy affect these factors in the long run? Explain.;2. How rapidly has the money supply (M1) grown during the past twelve months? State the;rate of growth (use and the most recent;release, use the seasonally adjusted figures. Calculate the rate of growth across the year;by taking the (new amount of M1- old amount of M1)/old amount of M1). Given the state;of the economy, should monetary authorities increase or decrease the growth rate of;money? Explain why.;3. Is stability in the general level of prices through time important? Why or why not?;Should price stability be the goal of monetary policy? Explain your responses.;4. Compare and contrast the impact of an unexpected shift to a more expansionary monetary;policy under rational and adaptive expectations. Are the implications of the two theories;different in the short run? Are the long-run implications different? Explain.


Paper#15508 | Written in 18-Jul-2015

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