FYI:Milton Friedman, who passed away in 2006 in California, was a professor of economics at University of Chicago for many years. He was awarded the 1976 Nobel Memorial Prize in Economics for his contribution to consumption analysis and to monetary history and theory. He was famous for being very articulate and explaining even the most complicated matters in easy-to-understand terms. To see what he looked and sounded like, take a look at the following short clip from the 70s:

https://www.youtube.com/watch?v=Be4PPW1rmjE&ab_channel=EconomicLessons

a) Explain the quantity theory of money. How does the quantity theory of money relate to Milton Friedman's famous statement that "Inflation is always and everywhere a monetary phenomenon?"

b)In the "Classical Theory of Inflation", what determines the price level and the value of money? Explain using a supply and demand plot.

c)Now using your supply and demand plot from part-b of this question, illustrate the impact of an expansionary monetary policy on the inflation rate and the price level. For full credit, also do explain how the transition process works from the initial equilibrium to the final equilibrium.

d)What is meant by the phrase "Money is neutral in the long run"? (in other words, what is monetary neutrality?). Explain by using the quantity equation.

e)What is the Fisher equation? What relationship does it represent?