Neo-classical version of is – lm model

Question

Question 1) Explain the following in one or two sentences.

a) Fiscal policy.

b) Consumption.

c) Unemployment.

d) High powered money.

e) Exchange rate.

f) Real balance effect.

g) Balance of payments.

h) Classical dichotomy.

i) Equilibrium.

j) Asset market.

Question 2) Differentiate between the following terms:

a) Consumption demand and investment demand.

b) Accelerator and multiplier

c) Closed and open economy.

d) Inflation and deflation.

e) Classical and Keynesian economics.

f) Absolute income and Relative income.

g) Monetary approach and Keynesian approach to balance of payments.

Question 3) Critically explain the permanent income hypothesis.

Question 4) Mention briefly the neo-classical version of IS – LM model.

Question 5) Write down the factors that are determining demand for money according to Friedman ?

Question 6) Describe Tobin’s theory of portfolio selection Model of demand for money.

Question 7) Describe the lags in investment demand.

Question 8) Describe the concept of real balance effect.

Question 9) Write down the factors that influence the stock of money ?

Question 10) Compare and contrast absolute income and relative income hypothesis.

Question 11) Demonstrate the impact of multiplier accelerator interaction on income.

Question 12) Critically describe the Keynesian theory of demand for money.

Question 13) What do you understand by consumption function? Describe the factors influencing consumption function.