1.The following equations describe a certain economy

C=400+0.75yd

I=200-100r

T=70+0.2r

G=100

M=150+0.06Y

Ms=4000

Md=0.2r-10r

Required to derive IS and LM equations

Calculate the equilibrium YCTM and I

2. What are the effects of increasing money supply on interest rate

3. Draw a graph which demonstrate the above phenomenon on question 2 above

4. Describe the three distinctive theories of holding money

5. How do banks create money

6. What are the key properties of money

7.What are the basic functions of money

8. Suppose that there is only one bank A. Mr X deposit $1000. How will this transaction be entered in the bank accounts?

9. Graphically draw an inflationary and deflationary gap

10. Differentiate between inflationary and deflationary gaps