Assignment:
Please answer the questions in a Word document, maximum 2 pages (include answer only). APA style is preferred.
1) What is quantity theory of money? Please elaborate in details.
2) What are the factors that shift aggregate demand (AD)?
Positive Shocks (Increase AD) (= Higher Growth Rate of Spending)
A faster money growth rate
Confidence
Increased wealth
Lower taxes
Greater growth of government spending
Increased export growth
Decreased import growth
Negative Shocks (Decrease AD) (= Lower Growth Rate of Spending)
A slower money growth rate
Fear
Reduced wealth
Higher taxes
Lower growth of government spending
Decreased export growth
Increased import growth