Exam 19: Current Issues in Macro Theory and Policy

Monetarists argue that when expansionary fiscal policy is financed through borrowing:

The equation of exchange indicates that:

If the amount of money in circulation is $8 billion and the value of total output is $40 billion in an economy, then the:

From a monetarist perspective, instability in the macro economy arises from:

Which monetarist idea has been absorbed into mainstream macroeconomics?

Rational expectations theory suggests that changes in people's expectations in response to changes in fiscal and monetary policy changes will make such policy-changes ineffective.

In the monetarist view, the economy is inherently stable, but the mismanagement of monetary policy creates instability.

According to mainstream economic analysis, a balanced-budget rule for fiscal policy would be:

Economist Abba Lerner compared the economy to a car needing:

In the strict monetarist view, a large increase in the money supply will have:

In the monetarist equation of exchange, MV is the monetarist counterpart of:

Monetarists would argue that the severe recession of 2007-2009 was primarily caused by:

The mainstream view of the economy since 1946 is that it has become more stable because of the use of discretionary fiscal and monetary policies.

If nominal GDP is $848 billion and the velocity of money is 4, then the: