1. Explain The quantity theory of money and the classical Cambridge and the demand for money.
2. Briefly outline why Baumol's "The Transactions Demand for Cash" is a further development in the Keynesian approach to the demand for money.
3. Using IS/LM, aggregate demand and aggregate supply models of the economy, show that monetary policy is effective in the short run but it is neutral (ineffective) in the long run. In the same context, identify conditions under which you would recommend "activist" monetary policy
4. Derive and explain the IS and LM curves.