Assignment:
Question 1. Explain how an active policy differs from a passive policy.
Question 2. Explain why the Fed can attempt to target either changes in the money supply or changes in interest rates, but not both.
Question 3. How does monetary policy affect aggregate demand in the short run? How does monetary policy affect aggregate demand in the long run.
Question 4. Explain how the short-run Phillips curve, the long-run Phillips curve, the short-run aggregate supply curve, the long-run aggregate supply curve, and the natural rate hypothesis are all related. How do active and passive views of these concepts differ?
Question 5. What is meant by the demand for money? Which way does the demand curve for money slope? Why?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format.