Compare the three different theories of money demand

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Reference no: EM131476764

1. Compare and contrast the three different theories of money demand.

2. Given the quantitative theory of money,

A. What happens to real GDP if the money supply is cut in half, velocity is stable and prices are sticky?

B. What happens to prices if the money supply doubles under the classical model assuming that velocity is stable?

3. Explain the 4 tools of monetary policy and how they impact interest rates, AD, & GDP (10 points)

4. Give 4 transmission mechanism and explain how each impacts the financial markets and the overall economy.

5. Given the current state of the economy, what should Fed. Do with monetary policy and why?

6. Compare the pros and cons of independent central bank?

7. Compare pros and cons of monetary rule and discretionary monetary policy.

8. Give the money multiplier and explain how the 3 different players impact the money multiplier and the money supply.

Reference no: EM131476764

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