Question 1

According to the monetarist transmission mechanism,a decrease in the money supply __________ aggregate demand.

Accepted Answer

A)  directly increases 
B)  indirectly increases 
C)  directly decreases 
D)  indirectly decreases 
E)  equals the increase in 
A)  directly increases 
B)  indirectly increases 
C)  directly decreases 
D)  indirectly decreases 
E)  equals the increase in

Question 2

In the monetarist transmission mechanism,changes in the money market directly affect aggregate demand.

Accepted Answer

A) True 
 B)False

Question 3

Which scenario best explains the Keynesian transmission mechanism when the investment demand curve is vertical?

Accepted Answer

A)  The interest rate falls,investment falls even more,the AD curve shifts rightward,but total expenditures do not change. 
B)  The interest rate falls,investment rises,total expenditures rise,and the AD curve shifts rightward. 
C)  The interest rate falls,investment falls instead of rising,and the AD curve ends up shifting leftward. 
D)  The interest rate falls,but investment does not respond; there is no change in total expenditures and no shift in the AD curve. 
A)  The interest rate falls,investment falls even more,the AD curve shifts rightward,but total expenditures do not change. 
B)  The interest rate falls,investment rises,total expenditures rise,and the AD curve shifts rightward. 
C)  The interest rate falls,investment falls instead of rising,and the AD curve ends up shifting leftward. 
D)  The interest rate falls,but investment does not respond; there is no change in total expenditures and no shift in the AD curve.

Question 4

Which of the following statements is false?

Accepted Answer

A)  Keynesians would not advocate an expansionary monetary policy to eliminate a recessionary gap if they believed that investment demand was interest-insensitive. 
B)  Keynesians would not advocate an expansionary monetary policy to eliminate a recessionary gap if they believed the money market was in the liquidity trap. 
C)  Keynesians would advocate an expansionary monetary policy to eliminate a recessionary gap if they believed investment spending was insensitive to changes in the interest rate. 
D)  Keynesians believe that money wages are inflexible in the downward direction. 
A)  Keynesians would not advocate an expansionary monetary policy to eliminate a recessionary gap if they believed that investment demand was interest-insensitive. 
B)  Keynesians would not advocate an expansionary monetary policy to eliminate a recessionary gap if they believed the money market was in the liquidity trap. 
C)  Keynesians would advocate an expansionary monetary policy to eliminate a recessionary gap if they believed investment spending was insensitive to changes in the interest rate. 
D)  Keynesians believe that money wages are inflexible in the downward direction.

Question 5

-Refer to Exhibit 15-5.At short-run equilibrium,this economy is in a(n)___________________ gap.An economist who believes that the economy is self-regulating would assert that _____________________________.

Accepted Answer

A)  inflationary; the SRAS curve will shift leftward sufficiently to close the inflationary gap 
B)  recessionary; the SRAS curve will shift rightward sufficiently to close the recessionary gap 
C)  inflationary; the AD curve will shift leftward sufficiently to close the inflationary gap 
D)  recessionary; the AD curve will shift rightward sufficiently to close the recessionary gap 
A)  inflationary; the SRAS curve will shift leftward sufficiently to close the inflationary gap 
B)  recessionary; the SRAS curve will shift rightward sufficiently to close the recessionary gap 
C)  inflationary; the AD curve will shift leftward sufficiently to close the inflationary gap 
D)  recessionary; the AD curve will shift rightward sufficiently to close the recessionary gap

According to the monetarist transmission mechanism,a decrease in the money supply __________ aggregate demand.

In the monetarist transmission mechanism,changes in the money market directly affect aggregate demand.

Which scenario best explains the Keynesian transmission mechanism when the investment demand curve is vertical?

Which of the following statements is false?

-Refer to Exhibit 15-5.At short-run equilibrium,this economy is in a(n)_ gap.An economist who believes that the economy is self-regulating would assert that ___________.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

Exam 15: The Distribution of Income and Poverty

According to the monetarist transmission mechanism,a decrease in the money supply __________ aggregate demand.

In the monetarist transmission mechanism,changes in the money market directly affect aggregate demand.

Which scenario best explains the Keynesian transmission mechanism when the investment demand curve is vertical?

Which of the following statements is false?

-Refer to Exhibit 15-5.At short-run equilibrium,this economy is in a(n)___________________ gap.An economist who believes that the economy is self-regulating would assert that _____________________________.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

-Refer to Exhibit 15-5.At short-run equilibrium,this economy is in a(n)_ gap.An economist who believes that the economy is self-regulating would assert that ___________.