Question 1

According to the monetarists, which of the following is true?

Accepted Answer

A)  Instability in the money supply is the primary cause of economic instability. 
B)  A reduction in the money supply will cause consumers to increase spending. 
C)  A reduction in the money supply will cause a proportional reduction in wages and prices, leaving output unchanged. 
D)  A rapid growth rate of the money supply will lead to a rapid growth rate of real GDP. 
A)  Instability in the money supply is the primary cause of economic instability. 
B)  A reduction in the money supply will cause consumers to increase spending. 
C)  A reduction in the money supply will cause a proportional reduction in wages and prices, leaving output unchanged. 
D)  A rapid growth rate of the money supply will lead to a rapid growth rate of real GDP.

Question 2

Write out the equation of exchange. What assumptions did the classical economists make about the variables that compose the equation, and what did this lead them to conclude about money and prices?

Accepted Answer

The equation of exchange is MV

Question 3

Which economist made the following statement: "Every major contraction in the U.S. economy has either been created or greatly exacerbated by monetary instability. Every major inflation has been caused by monetary expansion."

Accepted Answer

A)  Milton Friedman 
B)  John Maynard Keynes 
C)  Adam Smith 
D)  Paul Samuelson 
A)  Milton Friedman 
B)  John Maynard Keynes 
C)  Adam Smith 
D)  Paul Samuelson

Question 4

The cost of holding money balances increases when

Accepted Answer

A)  the purchasing power of money rises. 
B)  the money interest rate increases. 
C)  the price of goods and services falls. 
D)  consumer income expands. 
A)  the purchasing power of money rises. 
B)  the money interest rate increases. 
C)  the price of goods and services falls. 
D)  consumer income expands.

According to the monetarists, which of the following is true?

Write out the equation of exchange. What assumptions did the classical economists make about the variables that compose the equation, and what did this lead them to conclude about money and prices?

Which economist made the following statement: "Every major contraction in the U.S. economy has either been created or greatly exacerbated by monetary instability. Every major inflation has been caused by monetary expansion."

The cost of holding money balances increases when

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 14: Modern Macroeconomics and Monetary Policy

According to the monetarists, which of the following is true?

Write out the equation of exchange. What assumptions did the classical economists make about the variables that compose the equation, and what did this lead them to conclude about money and prices?

Which economist made the following statement: "Every major contraction in the U.S. economy has either been created or greatly exacerbated by monetary instability. Every major inflation has been caused by monetary expansion."

The cost of holding money balances increases when

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters