1. What is the equation of exchange and velocity of money? Explain the quantity theory of money and its relationship to NOMINAL GDP. What happens in the long-run when the money supply (MS) increases? What if LRAS and MS grow at 3%? What if velocity varies?
2. What are targets for MP growth? What were the targets before 1982? After 1982? What caused the Fed to change targets? What if the Fed targets an interest rate below equilibrium interest rate (note: nominal i= real r+expected inflation) like the 1970s?