HARVARD UNIVERSITY

                     DEPARTMENT OF ECONOMICS

ECONOMICS 10b SPRING 2015

                              Problem Set #6

                   (due IN SECTION on Friday, April 10th)

1. Consider the following quote from Milton Friedmans very famous address to the

   American Economic Association in 1968, entitled The Role of Monetary

   Policy:

   If liquidity preference is absolute or nearly so as Keynes believed likely in

   times of heavy unemployment interest rates cannot be lowered by monetary

   measures. If investment and consumption are little affected by interest rates as

   Hansen and many of Keynes other American disciples...