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Macroeconomics Study Set 71
Quiz 15: Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical
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Question 21
Multiple Choice
Monetarists believe that changes in monetary policy would have:
Question 22
Multiple Choice
In case of classical model, increase in aggregate expenditure would:
Question 23
Multiple Choice
According to the monetarists, deliberate government intervention:
Question 24
Multiple Choice
Who is the leading proponent of the monetarist theory?
Question 25
Multiple Choice
"The dramatic reduction of the money supply during the 1930s was responsible for the Great Depression. The macroeconomy is intrinsically stable if left alone by the prying hand of government. The Federal Reserve Board, instead of tightening money during booms and loosening money during recessions (policies that are ineffective due to time lags) , should simply increase the supply of money at a steady rate of 3 to 5 percent per year." This statement reflects which school of thought?
Question 26
Multiple Choice
Monetarists think that the government:
Question 27
Multiple Choice
Milton Friedman in his book on consumption function, discussed the importance of _____, rather than _____, to understand consumer spending.
Question 28
Multiple Choice
Monetarists believe that:
Question 29
Multiple Choice
_____ believe that a government that takes an active role in the economy may do more harm than good because economic policy operates with a long and variable lag.
Question 30
Multiple Choice
Monetarists believe that in the short run:
Question 31
Multiple Choice
According to the traditional Keynesian school of thought, expansionary fiscal and monetary policy will:
Question 32
Multiple Choice
_____ have faith in the free market (price) system that leads them to favor minimal government intervention.
Question 33
Multiple Choice
The time it takes for a particular monetary policy to change income is called the _____.
Question 34
Multiple Choice
Which of the following events challenged Keynesian views, and led to the popularity of Milton Friedman's ideas?
Question 35
Multiple Choice
The recognition lag refers to the:
Question 36
Multiple Choice
According to the new Keynesians:
Question 37
Multiple Choice
"The market is not a self-regulating mechanism because prices are not flexible and nothing ensures that planned leakages will be offset by planned injections. To bring the economy out of depression and end high unemployment, some way of stimulating aggregate demand is required. This can be best achieved by a combination of government deficit spending and regulation of tax rates." Which school of thought does this statement best represent?
Question 38
Multiple Choice
The school of thought that assumes that real GDP is determined by aggregate supply, whereas the equilibrium price level is determined by aggregate demand is known as _____.