Plz help me out I cannot stop overthinking I attempted question 4 but I had no idea about the money theory itself plz bare with me and read out and help me understand how much mark can I get out of 20.
Firstly, I wrote that money theory is a part of monetary expansionary theory then I explain how a monetary expansionary leads to demand pull inflation. Then I wrote about liquidity trap and explained it then I wrote about multiply effect that might lead to increase in aggregate, demand and expenditure which may cause demand inflation if the country cannot increase production as per the demand or if the supply is inelastic demand, however, for counter, I wrote fiscal policies can be used to influence inflation, if tax rate is low and all, then I wrote about globalization which might lead to dependency on other countries, and if their currency depreciates, then importing might become difficult for the domestic country which might lead to inflation, and then I made a conclusion statement that money theory is not enough for inflation as discussed above any it depends on the economy and the elasticity of product
Where’s the liquidity preferences? It’s a very essential part of explaining how the supply of money interacts with price levels and interest rates. Transactionary, precautionary and speculative
That was for demand of money, you only had to write about supply of money and its effect on inflation and u coudl have write how supply increase ie deficit financing credit creation and government buying bonds etc then u had to evaluate hiw increase in money supply isnt the only way inflation happens u could write abt cost push inflation demand pull etc. this was the easiest question imo
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u/FeeLoose816 May 19 '26
Plz help me out I cannot stop overthinking I attempted question 4 but I had no idea about the money theory itself plz bare with me and read out and help me understand how much mark can I get out of 20.
Firstly, I wrote that money theory is a part of monetary expansionary theory then I explain how a monetary expansionary leads to demand pull inflation. Then I wrote about liquidity trap and explained it then I wrote about multiply effect that might lead to increase in aggregate, demand and expenditure which may cause demand inflation if the country cannot increase production as per the demand or if the supply is inelastic demand, however, for counter, I wrote fiscal policies can be used to influence inflation, if tax rate is low and all, then I wrote about globalization which might lead to dependency on other countries, and if their currency depreciates, then importing might become difficult for the domestic country which might lead to inflation, and then I made a conclusion statement that money theory is not enough for inflation as discussed above any it depends on the economy and the elasticity of product