1: How does the Keynesian transmission mechanism purportedly work?

2: How does the Monetarist transmission mechanism purportedly work?

3: What is the difference between the Short Run Aggregate Supply function and the Long Run Aggregate Supply function and why is this distinction important?

4 Is it possible for monetary policy to impact the Long Run Aggregate Supply function? What is your reasoning?

5 What does the theory of “Rational Expectations” indicate regarding monetary policy?

6 Explainthe Rational Expectations theory.

7 What is the “Liquidity Preference Theory” and why is it important to monetary policy considerations?

8 Explain how expansionary fiscal policy affects the Keynesian Cross model.  You may want to scan you diagrams to respond.

9 How does unexpected inflation impact transaction costs?

10 Describe the basic theory regarding Money Demand from a Keynesian perspective.

Bonus Question:  OPTIONAL (3 points each)

Bonus 1:  Use a theory from this course to explain the Great Depression.

Bonus 2:  Use a theory from this course to explain the 2008 financial crisis.