Exam 31: The Debate Over Monetary and Fiscal Policy

A contractionary monetary policy is most likely to reduce output with little impact on inflation when the economy

A scatter diagram of money growth rates and inflation rates from 1982 to 2010 indicates

An employee of Macro.com Corporation is paid $5,000 a month, which she spends regularly throughout the month until she has a zero balance in her checking account at the end of the month.If the corporation changes to a semimonthly payroll schedule, how will the employee's average cash balance change? Assume she does not change her spending pattern when she is now paid twice a month.

It is often reported by financial news reports that higher interest rates reduce automobile sales.If this is true, we can expect

Historically, the most harmful bubbles are those financed by heavy borrowing and extensive use of leverage.

Multiplier effect is the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending.

In response to the Great Recession of 2007-2009, when did the Federal Reserve first cut the federal funds rate to zero?

What are the important factors that determine the velocity of money?

For both Keynesians and monetarists to predict accurately the effects of a change in the money supply on the price level, they need to add ____ to their analysis.

How do lags affect stabilization policy? Your answer should include three specific types of lags.

Critics of the unconventional monetary policies in 2009 and 2010 argued that by deciding which financial institutions would fail and which would not, the Fed was assuming authority that rightfully belonged to

Many banks offer accounts featuring "Automatic Transfer from Savings" allowing customers to overdraw checking accounts and the bank will transfer enough funds to cover the check automatically.Most likely, what is the effect of this feature on velocity?

The steepness of the aggregate supply curve schedule depends on the time frame.

One's opinion about the proper size of government should have nothing to do with one's view on stabilization policy.

Over long periods of time, M₂ velocity has been relatively constant.

If economists say that a 7 percent growth in the money supply will increase aggregate demand by 7 percent, they are assuming that velocity

The expenditure lags between fiscal actions and their effects on aggregate demand are probably fairly short.

Which of the following will tend to increase velocity?

Is the equation of exchange an economic model?

Some examples of conventional types of fiscal policy actions are changes in government purchases or in personal taxes.