Exam 26: Transmission Mechanisms of Monetary Policy

Monetarists directly study the link between money and economic activity using ________.

Monetarists claim that ________ models ignore important transmission mechanisms and therefore ________ the importance of the effects of monetary policy on the economy.

When Keynesians argue that "correlation does not necessarily imply causation," they are probably criticizing ________.

Tobin's q theory suggests that monetary policy may affect investment spending through its impact on ________.

When the ________ has an interest rate target, ________ output might lead to a ________ money supply.

Explain how expansionary and contractionary monetary policies affect aggregate demand through the exchange rate channel.

Early Keynesians concluded that changes in monetary policy had no impact on aggregate output because early empirical studies found no linkage between movements in ________ and ________.

Recent Japanese experience has been characterized by tight monetary policy, as indicated by ________.

The ________ held the view that monetary policy does not matter at all for movements in aggregate output.

Monetarists contend that the channels of monetary influence in Keynesian structural models are too ________ defined, ________ the importance of monetary policy.

A rise in stock prices ________ the net worth of firms and so leads to ________ investment spending because of the reduction in moral hazard.

Early Keynesians believed that ________ interest rates during the Great Depression indicated that monetary policy had been ________.

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

According to Tobin's q theory, if q is ________, new plant and equipment capital is ________ relative to the market value of business firms, so companies can buy a lot of new investment goods with only a ________ issue of stock.

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

Economic theory suggests that ________ interest rates are ________ important than ________ interest rates in explaining investment behavior.

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

Because ________ evidence is of a ________ nature, there is always the possibility of reverse causation, in which output growth causes money growth.

Real business cycle theory states that the most important cause of business cycles is ________.

The monetarist statistical evidence examines the correlations between both ________ and ________ with ________.