Exam 17: Macroeconomics: Events and Ideas

The main idea behind monetarism is that:

Classical macroeconomists focused on the long-run effects of monetary policy on the aggregate price level and argued that it had no short-run or long-run effects on aggregate output.

Rational expectations theory asserts that because people have rational expectations, if a policy of reducing the money supply is used:

Since 1982, the Federal Reserve has:

The belief that expansionary monetary policy is NOT at all helpful to the economy in fighting recessions is attributed to:

The Great Moderation consensus includes the belief that expansionary monetary policy is effective in fighting recessions.

The slump that followed the 2008 financial crisis is called the:

When other things are equal and using the classical model, an increase in the money supply leads to an equal proportional _____ in the aggregate _____, with no effect on aggregate _____.

Cutting government spending to increase private-sector confidence, leading to increases in output and employment, is called:

Milton Friedman was the leading figure in the movement called:

According to Keynes, the remedy for a recessionary gap was straightforward. The solution was to:

After 1980, the velocity of money began to:

Nearly all economists agree that expansionary fiscal policy can _____ aggregate _____.

Keynes suggested that money is:

Fiscal policy is usually:

Use of activist fiscal and monetary policy can bring rapid growth, as was the case in the United States before the 1972 election. One consequence of an activist policy is:

Which statement is FALSE? At the time of the Great Depression:

Discretionary fiscal policy may be counterproductive because:

The main consequence of Keynesian economics is:

Use the following to answer questions: -(Figure: Classical Versus Keynesian Macroeconomics) Refer to Figure: Classical Versus Keynesian Macroeconomics. According to the Keynesian view, if this economy shifts from AD₂ to AD₁, perhaps because of a large increase in government spending, the price level will _____ and real GDP will _____.