Using an appropriate diagram(s), explain the concept of direct and indirect finance. As a student of International Finance and Monetary Policy, explain the monetary policy approach the Central Bank should take when it wants to increase the GDP. Offer the tools that are available and the consequences, if any. Explain the theory of money demand and its relation to inflation in the economy. Use an appropriate equation to demonstrate this. Explain the concept of moral hazard in relation to financial systems.

Using an appropriate diagram(s), explain the concept of direct and indirect finance. As a student of International Finance and Monetary Policy, explain the monetary policy approach the Central Bank should take when it wants to increase the GDP. Offer the tools that are available and the consequences, if any. Explain the theory of money demand and its relation to inflation in the economy. Use an appropriate equation to demonstrate this. Explain the concept of moral hazard in relation to financial systems.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter15: The Debate Over Monetary And Fiscal Policy

Section: Chapter Questions

Problem 3TY

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