Exam 17: Alternative Views in Macroeconomics

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to monetarists, an expansionary fiscal policy in the long run and after all the adjustments have been made

According to the quantity theory of money, nominal GDP will ________ if the money supply ________.

Which of the following statements is not consistent with the quantity theory of money?

Increases in government spending are consistent with supply-side economic policies.

The velocity of money is the ratio of

If the demand for money depends on the interest rate, then a 15% increase in the money supply will increase

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to ________, a(n) ________ fiscal policy in the long run and after all the adjustments have been made increases price level above P₁, but does not change equilibrium output.

According to the Lucas supply function, if the expected price level is larger than the actual price level

If the stock of money is $100 billion, velocity is 4, and the price level is 5, what is income?

A price surprise is equal to the expected price level minus the actual price level.

A velocity of ________ means money changes hands, on average, every 2 months.

According to the Lucas supply function, when the income effect dominates the substitution effect, workers who experience a ________ price surprise will work ________ hours.

Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1 -Refer to Figure 17.1. At point B

The Lucas supply function states that real output is a function of the price surprise.

Because people may change how they react when economic policies are changed, comparing macroeconomic models is

Most empirical testing in macroeconomics uses data beginning from about 1950.

Lowering taxes is a contractionary Keynesian policy.

Supporters of supply-side economics claim that ________ tax policies were quite successful in stimulating the economy because throughout most of the 1980s, federal receipts continued to rise even though tax rates had been cut.

The rational-expectations hypothesis implies that there is no need for government stabilization policies.

According to the Lucas supply function, workers who experience a positive price surprise will work more hours when