ECON 4000-01      
November 22, 1991

1.  GNP of the U.S. is about _____________________.

Answer four (4) of the following:

1.    What is meant by speculative and transactions demand for money?  Are they both  
        negatively sloped functions?  If so why or why not?  How would a liquidity trap be shown? 

2.    What is an LM curve?  Show how it is derived graphically.  Why is it positively sloped? 

3.    Distinguish between the major types (theories) of inflation.  What are the policy  implications?

 4.    What is the classical interpretation and cure for inflation?

 5.    How do the following relate to the evaluation of economic policy?  Lags, Full-employment 
        budget, "crowding out", GNP gap.

 6.    What are the key points of debate between the monetarists and Keynesians?  What is
         the basis of these differences and the evidence about them?