Discuss context neoclassical model and new classical model

Reference no: EM13897616

1. "For the economy to have a determinate price level and money to have a positive value, it is necessary that the economy have a demand for money and a mechanism for limiting its supply." Discuss in the context of (a) the quantity theory, (b) neoclassical economics with an exogenous money supply, and (c) privately issued monies.

2. "In a closed economy, if the money stock is held constant by the central bank, an increase in the government de?cit does not have either short-run or long-run effects on aggregate demand and output." Discuss in the context of the neoclassical model and the new classical model (with rational expectations and Ricardian equivalence).

Reference no: EM13897616

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