1. According to Knut Wicksell, what happens to the rate of inflation if the market rate of interest is below the "natural rate of interest"? Why does...

1. According to Knut Wicksell, what happens to the rate of inflation if the market rate of interest is below the "natural rate of interest"? Why does this happen? In Olivier Blanchard's IS-LM-PC model, what happens to inflation if we are below rn, which he calls the "natural rate of interest," the "neutral rate of interest," or the "Wicksellian rate of interest"? Why? According to Blanchard, what can monetary policy do to control inflation?

2. In Laurence Meyer's "Monetarism Without Money" model, there are "backward-looking" elements in his equations (1) and (2) so that last period's level of the output gap and last period's rate of inflation affect this period's output gap and inflation rate. This is to capture the role of sticky wages and prices in the short run. Here he must really be talking about sticky rates of change of wages and prices. How does this allow a role for monetary policy, and how does monetary policy work in his model? We ought to be able to apply the New Keynesian explanations of sticky wages and prices to explain the existence of "backward-looking" influences. How do the New Keynesians argue that explicit and implicit contracts and efficiency wages slow down changes in money and real wages? Why did John Maynard Keynes say, though, that sticky wages and prices are not necessary to explain unemployment?