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ECONOMICS-2015: Daily Answer Writing Challenge – 16

ECONOMICS-2015: Daily Answer Writing Challenge – 16

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1) ‘Monetarists are of the view that only money does and Keynesians believe that money does not matter.’ What is your reasoning of the extreme views held by the monetarists and the Keynesians ? (2011 – 20 marks)

2) Is Friedman’s quantity theory of money close to Classical or Keynesian approach to the aggregate demand for money? Give justifications for your arguments (2011 – 20 marks)

3) What is ‘liquidity trap’? How does it occur? Illustrate. (2011 – 20 marks)