According to the monetarists, which of the following is true? - ANSWER-Instability in the money supply is the primary cause of economic
... [Show More] instability.
When the interest rate decreases, the opportunity cost of holding money - ANSWER-decreases, so the quantity of money demanded increases.
If the Fed wanted to institute a more expansionary monetary policy, which of the following would it be most likely to do? - ANSWER-buy government bonds from the public
When the Fed unexpectedly increases the money supply, it will cause an increase in aggregate demand because - ANSWER-real interest rates will fall, stimulating business investment and consumer purchases.
Which of the following developments will most likely lead to an increase in the velocity of money? - ANSWER-an increase in money interest rates
The velocity of money is - ANSWER-GDP divided by the money supply.
Which of the following best describes the relationship between the velocity of money and the demand for money? - ANSWER-When the demand for money declines, the velocity of money increases.
The "quantitative easing" policies of the Fed during, and following, the financial crisis of 2008-2009, - ANSWER-expanded the reserves available to the banking system, but the M1 money supply increased slowly because the banks enlarged their excess reserves.
As the Fed maintained interest rates at near zero during 2008-2012, - ANSWER-households and businesses held larger money balances and the velocity of money fell substantially.
Which of the following reduced the demand stimulus effects of the Fed's low interest rate policy pursued during, and after, the financial crisis of 2008-2009? - ANSWER-A reduction in earnings derived from money market accounts, saving deposits, and similar saving instruments.
Which of the following is true regarding economic fluctuations in the United States? - ANSWER-The 1930s was a period of prolonged economic stagnation and high unemployment.
Which of the following is a major area of disagreement between activists and nonactivists? - ANSWER-Activists believe discretionary macroeconomic policy can be applied in a manner that will enhance economic stability. Nonactivists disagree.
Computer forecasting models are most accurate at predicting the economy when - ANSWER-c.
economic conditions are relatively stable.
According to the rational expectations theory, - ANSWER-people form expectations, in part, by considering the probable future effects of changes in government policy.
If the government accelerates money supply growth and enlarges the budget deficit to stimulate aggregate demand, the rational expectations hypothesis indicates that decision makers will - ANSWER-quickly take steps to adjust their decision making in light of the more expansionary policies.
Modern Phillips curve analysis indicates that if people - ANSWER-underestimate inflation, actual unemployment will be below the natural rate.
During the 1960s, most economists believed that expansionary macro-policy - ANSWER-that caused inflation would permanently reduce unemployment.
The national debt is the - ANSWER-indebtedness of the federal government in the form of outstanding interest-earning bonds.
If the federal government were to run a budget surplus, this would - ANSWER-reduce the size of the national debt.
As measured by the amount of time spent in recession, the 1983-2015 period was - ANSWER-the most stable era in American history.
Which of the following is true of the per person income of the West (Western Europe and its offshoots of the United States, Canada, Australia, and New Zealand) - ANSWER-It is now approximately 20 times greater than the figure of 200 years ago.
Which of the following is true regarding the per person income of the world during the past 1000 years? - ANSWER-The world's income per person changed very little during the 800 years prior to 1813, but it has increased by nearly tenfold during the past 200 years.
Which of the following is most important if the living standards of people residing in a country are going to improve? - ANSWER-growth of per capita GDP
When per capita real GDP is increasing, real output is growing - ANSWER-more rapidly than population. [Show Less]