Give a brief but careful explanation. An expansionary open market operation increases the money supply and decreases the interest rate. With higher interest rates people will save more, therefore money demand goes up.
Investment always equals private saving.
The use of credit cards increases the velocity of money. The Saving Paradox. Explain only the main idea, no details or algebra are necessary. Graph money demand and money supply. Derive the interest rate as a function of the money stock and nominal income.