(1) [20 points] During the early 1980s, the Korean economy saw the largest and quickest reduction in inflation recent history. By the late 1970s, inflation had reached the double-digit range. Monetary policy in the early 1980s aimed to reduce the rate of inflation. This announcement began a period of tight money that, by 1983, brought the inflation rate down to about 3 percent. (i) Explain how the monetary tightening affects "nominal" interest rate in the short run using the liquidity preference theory (or IS - LM model). (ii) Explain how the monetary tightening affects "nominal" interest rate in the long run using the Quantity Theory of Money and the Fisher Effect