Answer Key to sample problems for test 3

I'm sorry that there are only a few multiple choice problems. My potential pool of problems is rather small.

Here is the key to the sample problems that are available on the I-drive (I hope it is correct):

1-C, 2-C, 3-C, 4-C, 5-A,
6-B, 7-A, 8-A, 9-B,
10-A, 11-D, 12-D. (Problem 11 is lousy. In our development of the monetary approach we ignored the demand side of money. But we certainly will be talking about it very soon!)

To be quite honest, I think some of the problems on the test have a little more difficulty.

Make sure you memorize the formulas for PPP and the quantity theory. (All monetary approach questions will involve the "Cambridge k" and not velocity. The only time that matters is if you have to calculate, say, an exchange rate. If you do, the k will be used.)

Two things I'll let you know for sure: You will be using one of my cheap calculators. You cannot use your own calculator. I know there are some important formulas but these are "definitional" in spirit. You need to memorize them, at least for now. (I'll say I was disappointed that those of you who were in my 421 class weren't able to rattle off what Py/M was equal to. I should have heard a chorus of "velocity".)

The other thing is there is ONE written problem. It involves a calculation and an explanation. You have no choice of two this time around.

I'll be online a little while tonight but I will be going to bed early. I may not be able to reply to late night emails. I have to be in Pittsburgh in the morning. Dr. Yaya Sissoko will be proctoring the test.

Good luck folks! There isn't that much material. And it only seems hard.