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1. What evidence would you need to establish whether or not money supply changes have been the main cause of changes in nominal income? What procedure can you use to determine the direction of causality between the changes in money and in income?
2. Specify the hypotheses on the natural rate of unemployment and the rational expectations. Discuss the logical and historical relationship between them.Discuss, for each concept, whether disequilibrium in the economy is consistent with it or not. If it is, discuss the role and usefulness of monetary policy in this state.
3. Discuss the evolution of the 1970s Monetarists' claim that "only monetary policy is effective" to the doctrines of the modern classical school that "no foreseen monetary policy is effective" and "no systematic monetary policy is effective." Would Friedman have subscribed to any of these propositions?
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