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Please answer the questions in a Word document, maximum 2 pages (include answer only). APA style is preferred.

1) What is quantity theory of money? Please elaborate in details.

2) What are the factors that shift aggregate demand (AD)?

Slide 52 


Positive   Shocks (Increase AD) (=   Higher Growth Rate of Spending)


A   faster money growth rate




Increased   wealth


Lower   taxes


Greater   growth of government spending


Increased   export growth


Decreased   import growth


Negative   Shocks (Decrease AD) (=   Lower Growth Rate of  Spending)


A   slower money growth rate




Reduced   wealth


Higher   taxes


Lower   growth of government spending


Decreased   export growth


Increased   import growth

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