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Economics-2014: Answer Writing Challenge – 25


01 October 2014

Q1) “Cambridge equation determines income (Y) assuming the rate of interest as given. while Keynes theory of interest rate determination assumes given income. Both are thus incomplete” Do you agree with the above assertion? How would then these two variables ( Y and r) be determined simultaneously? (200 Words)

Q2) Explain Milton Friedman reformulation of the Quantity theory of money (200 Words)
Q3) Explain the main aspects of the role of the Reserve bank of India under the present liberalized financial regime as compared to the regime prior to 1991 (200 Words)