Efficacy of monetary policy

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Problem 1: If there is a rise in money demand in the money market, what implications does this have for the economy? Explain in detail and discuss how the transmission of these changes would occur through the economy (discuss the money market, the loanable funds market, the goods market and the foreign exchange market). Now predict monetary policy designed to control the changes in the economy. Again, be sure to explain in detail.

Problem 2: Discuss, in detail, what you think are factors that lead to reduced efficacy of monetary policy, and factors that lead to reduced efficacy of fiscal policy.

Reference no: EM132417930

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