Q#1 Explain Balance of payment and explain relationship between 1) current account and capital account ii) current account and net export Q#2 How would each of the following affect national saving, investment, the current account balance, and the real interest rate in a large open economy? a. An increase in the domestic willingness to save (which raises desired national saving at any given real interest rate). b. An increase in the willingness of foreigners to save. c. A temporary increase in government purchases. d. An increase in taxes (consider both the case in which Ricardian equivalence holds and the case in which it doesn't hold). Q#3 Explain Demand for money and Determinants of the Demand for money? Q#4 What do you understand by Money and function of Money? Q#5 Money demand in an economy in which no interest is paid on money is Md/p = 500 + 0.2Y - 1000i. a. Suppose that P = 100, Y = 1000, and i = 0.10. Find real money demand, nominal money demand, and velocity. b. The price level doubles from P = 100 to P = 200. Find real money demand, nominal money demand, and velocity Q# 6 Explain Business cycle and cyclical behavior of macroeconomic variables (direction and timing)? Q#7 Explain Inflation and cost of inflation (Expected and unexpected). a. Differentiate Demand pull and cost push inflation with the help of graph which one you suggest for economy and why? b. Define Hyper inflation, stagflation? c. What do you understand by Phillips curve graphically explain short run and long run Phillips curve? Q#8 a) What determines the position of the FE line? Give two examples of changes in the economy that would shift the FE line to the right. b). What relationship does the IS curve capture? Derive the IS curve graphically and show why it slopes as it does. Give two examples of changes in the economy that would