Monetary Theory and Policy Test Questions
Monetary Theory and Policy
This is the consolidation of pass exam questions I collected plus some corrections of minor typing mistakes in previous emails: 2. Briefly discuss the main characteristic of money. (5 marks) 3. Outline the 3 main motives for holding money, according to Keynes. (5 marks) 5. State at least three neo-liberal supply-side policies, explaining carefully why that might be beneficial for the economy. (5 marks) 6. Draw the Laffer Curve & indicate the tax rate that maximizes revenue. Explain the logic behind the shape of the curve. (5 marks) 7. Write down the Fischer equation and explain what would be the implications of an increase in money supply if prices increased. (5 marks) 8. Define graphically the equilibrium in the money market. 9. Discuss how the liquidity preferences function reflects the 3 Keynesian motives for holding money. (5 marks) 10. What are the main elements of domestic aggregate demand? What is aggregate domestic demand equal to money equilibrium? (5 marks) 11. Explain the loanable funds theory of interest. (30 marks) 12. Explain & illustrate graphically the liquidity trap phenomenon and explain the consequences for the practice of monetary policy and apply it to the Japanese crisis in the 1990s. (30 marks) 13. Describe graphically how the monetary authority can manipulate the money supply in order to influence interest rates. Under what conditions would a liquidity trap exist? (30 marks) 14. Show graphically the three stages of the Keynesian transmission mechanism. (30 marks) 15. Critically evaluate the New Monetarist demand for money function compared to the Classical and Keynesian demand for money functions. (30 marks) 16. What is transmission mechanism? Discuss how the transmission mechanism can assist in the understanding of how policy measures will impact on the economy. (30 marks) 17. Compare and contrast the New Monetarist transmission mechanism with the
This is the consolidation of pass exam questions I collected plus some corrections of minor typing mistakes in previous emails: 2. Briefly discuss the main characteristic of money. (5 marks) 3. Outline the 3 main motives for holding money, according to Keynes. (5 marks) 5. State at least three neo-liberal supply-side policies, explaining carefully why that might be beneficial for the economy. (5 marks) 6. Draw the Laffer Curve & indicate the tax rate that maximizes revenue. Explain the logic behind the shape of the curve. (5 marks) 7. Write down the Fischer equation and explain what would be the implications of an increase in money supply if prices increased. (5 marks) 8. Define graphically the equilibrium in the money market. 9. Discuss how the liquidity preferences function reflects the 3 Keynesian motives for holding money. (5 marks) 10. What are the main elements of domestic aggregate demand? What is aggregate domestic demand equal to money equilibrium? (5 marks) 11. Explain the loanable funds theory of interest. (30 marks) 12. Explain & illustrate graphically the liquidity trap phenomenon and explain the consequences for the practice of monetary policy and apply it to the Japanese crisis in the 1990s. (30 marks) 13. Describe graphically how the monetary authority can manipulate the money supply in order to influence interest rates. Under what conditions would a liquidity trap exist? (30 marks) 14. Show graphically the three stages of the Keynesian transmission mechanism. (30 marks) 15. Critically evaluate the New Monetarist demand for money function compared to the Classical and Keynesian demand for money functions. (30 marks) 16. What is transmission mechanism? Discuss how the transmission mechanism can assist in the understanding of how policy measures will impact on the economy. (30 marks) 17. Compare and contrast the New Monetarist transmission mechanism with the