Exam 27: Transmission Mechanisms of Monetary Policy

A ________ model is one that describes how ________.

A model that is composed of many equations that show the channels through which monetary and fiscal policy affect aggregate output and spending is called a ________.

With regard to aggregate demand,early Keynesians tended to believe that ________.

The channels through which monetary policy affects economic activity are called the ________ of monetary policy.

Evidence that examines whether one variable has an effect on another by simply looking directly at the relationship between the two variables is ________.

Because of the presence of asymmetric information problems in credit markets,an expansionary monetary policy causes a ________ in net worth,which ________ the adverse selection problem,thereby ________ increased lending to finance investment spending.

According to the household liquidity effect,higher stock prices lead to increased consumption expenditures because consumers ________.

Franco Modigliani has found that an expansionary monetary policy can cause stock market prices to ________ and consumption to ________.

The subprime financial crisis caused a recession because of the ________ in adverse selection and moral hazard problems and the ________ in housing prices.

An expansionary monetary policy lowers the real interest rate,causing the domestic currency to ________,thereby ________ net exports.

Monetarists assert that monetary policy may affect aggregate demand through ________.

In a study published in 1963,Milton Friedman and Anna Schwartz found that in every business cycle they studied over nearly a hundred-year period,the growth rate of the ________ decreased before ________ decreased.

In response to the early Keynesians,monetarists contended that ________.

In a period of deflation,when there is a declining price level,low nominal interest rates do not necessarily indicate that the cost of borrowing is ________ or that monetary policy is ________.

One of the best examples of an episode in which a change in monetary policy appears to have been an exogenous event is the ________ in reserve requirements in ________.

The monetarist reduced-form evidence does not specify the working of the economy and thus is considered to be a ________.

Due to asymmetric information in credit markets,monetary policy may affect economic activity through the balance sheet channel,where an increase in the money supply ________.

Which of the following is not an advantage of a correctly specified structural model?

On the evening news you hear of a scientific study that directly links premature births to cigarette smoking.This is an example of ________.

Real business cycle theorists are critical of monetarist reduced-form evidence because they believe ________.