1. What are the effects of an increase in the "cost of going to the bank" (what in class we labeled with the Greek letter ) in the classical model of the business cycle?

2. In the long run, the Keynesian model shows that an increase in money supply leads to inflation and no real effects in GDP. Do you agree? If so, why?

3. If the economy as a whole is open and is indebted (as it is the case for the USA today), a decrease in interest rates leads to higher consumption unambiguously. Do you agree? If so, why?