Part one of term paper
In summary of Michael Darby’s article involving , three specific effects emerge as the most influential. Darby suggests that an increase in the rate of growth of the money supply leads to a pattern of changes in the interest rate that reflects the interaction of the liquidity, income, and expectations effects which vary over time in relat ...

Part two of term paper
... models will then be utilized in order to test the predictions that accompany these three theories. In conclusion, the platform of Darby’s argument rests on his suggestion that “the solution is said to depend on the interaction of the liquidity effect, the income effect, and the expectations effect, all of which display temporal patterns” (Darby1975). Theory Darby’s empirical argument is that the growth path of income and price level are not affected immediately after a change in money ...