Questions from Macroeconomics

Q: What does it mean to say that investment is “interest insensitive

What does it mean to say that investment is “interest insensitive”?

Q: Use the equation of exchange to explain changes in the price level

Use the equation of exchange to explain changes in the price level.

Q: Starting with long-run equilibrium, use the monetarist model to

Starting with long-run equilibrium, use the monetarist model to explain changes in the price level and Real GDP in the short run and long run due to a decline in velocity.

Q: Explain and diagrammatically represent the difference between one-shot supply-

Explain and diagrammatically represent the difference between one-shot supply-induced inflation and one-shot demand-induced inflation.

Q: If the nominal interest rate is 8 percent and the expected inflation

If the nominal interest rate is 8 percent and the expected inflation rate is 2 percent, what percentage does the real interest rate equal?

Q: In the simple quantity theory of money, changes in the money

In the simple quantity theory of money, changes in the money supply affect the price level but not Real GDP. Do you agree or disagree with this statement? Explain your answer.

Q: Under what condition(s) does the policy ineffectiveness proposition (

Under what condition(s) does the policy ineffectiveness proposition (PIP) hold?

Q: Explain the real business cycle theory.

Explain the real business cycle theory.

Q: Explain the relationship between the expected price level and the SRAS curve

Explain the relationship between the expected price level and the SRAS curve.

Q: Explain how demand-induced, one-shot inflation may seem

Explain how demand-induced, one-shot inflation may seem like supply-induced, one-shot inflation.