Unit 7 Homework 5 Questions

Your response should be at least 75 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.


How does monetary policy affect aggregate demand in the short run? How does monetary policy affect aggregate demand in the long run?


Explain how an active policy differs from a passive policy.


Explain why the Fed can attempt to target either changes in the money supply or changes in interest rates, but not both.


Explain how the short-run Phillips curve, the long-run Phillips curve, the short-run aggregate supply curve, the long-run aggregate supply curve, and the natural rate hypothesis are all related. How do active and passive views of these concepts differ?


What is meant by the demand for money? Which way does the demand curve for money slope? Why?

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