Chapters: 29, 30, 31,33,34,35

1. Define Money with types and functions.

2. When central bank wants to increase the money supply with open market operations,
what does it do?
3. Explain the concept of Money multiplier. OR Explain the concept of multiple creation
of deposits under fraction reserve system.
4. Which are the tools for monetary control and problems for controlling the money
supply?
5. Explain money supply, money demand and monetary equilibrium with the effects of a
monetary injection.
6. Write a Note on Fisher Effect.
7. Explain the difference between nominal and real variables and give examples of each.
According to the principle of monetary neutrality, which variables are affected by
changes in the quantity of money?
8. What are the costs of inflation?
9. Define net exports and net capital outflow. Explain how and why they are related.
10. Explain Real and Nominal exchange rates with examples.
11. Short note on purchasing power parity.
12. Explain three facts about economic fluctuation.
13. Explain why the aggregate demand curve slopes downward with diagram and also
explain why the aggregate demand curve might shift.
14. Explain the long run aggregate supply curve and give reasons why aggregate supply
curve might shift.
15. List and explain the three theories for why the short run aggregate supply curve is
upward sloping.
16. What is the theory of liquidity preferences? How does it help explain the downward
slope of the aggregate demand curve?
17. Use the theory of liquidity preferences to explain how a decrease in the money supply
affects the aggregate demand curve.
18. Explain the arguments for and against active stabilization policy. Give an example of
a government policy that acts as an automatic stabilizer.

19. Write a short note on Stagflation.

20. How the Phillips curve is related to the model of aggregate demand and aggregate
supply?
21. Why long run Phillips curve is vertical?
22. What is natural about the natural rate of unemployment? Why might the natural rate
of unemployment differ across countries?
23. How expected inflation shifts the short run Phillips curve?
24. Explain the effects of adverse shocks to aggregate supply on the Phillips curve.
25. Explain the cost of reducing inflation.[sacrifice ratio]