How do theories of mainstream macroeconomics and monetarism differ in relation to monetary policy?
What will be an ideal response?
Monetarism holds that inappropriate monetary policy is the primary cause of instability. Mainstream theorists believe that investment is the main cause of instability and monetary policy is the stabilizing factor. Changes in the money supply raise and lower interest rates to help smooth investment and prevent instability, according to mainstream economists. Monetarists and mainstream theorists take opposite stances on monetary policy.
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Which of the following is an important difference between government and privately-owned enterprises?
A) Government can distribute goods without employing discriminatory rationing criteria. B) Government can more easily use negative incentives to obtain resources. C) Government does not produce exchangeable commodities or services. D) Government provides services at a lower opportunity cost. E) Government tends to pay close attention to the varying preferences of the people.
The popular and dominant school of economists in the 1930s who could not explain why the economy went into a depression were the:
A. Classical School. B. Austrian School. C. Mercantilists. D. Ricardians.
Suppose that money supply growth increases. In the long run, this increases employment according to
a. both the long-run Phillips curve and the aggregate demand and aggregate supply model. b. neither the long-run Phillips curve nor the aggregate demand and aggregate supply model. c. the long-run Phillips curve, but not the aggregate demand and aggregate supply model. d. the aggregate demand and aggregate supply model, but not the long-run Phillips curve
A firm in a competitive industry faces a market price for output of $25 and a wage rate of $750. At the current level of employment (50 units of labor), the marginal product of labor is 20. In order to maximize profit, the firm should
A. keep the level of employment the same because the firm is earning a profit of $500. B. hire less labor because the firm is suffering a loss of $12,500. C. hire more labor because hiring another unit of labor would increase profit by $500. D. hire less labor because hiring the last unit of labor decreased profit by 250.