Contrast the Keynesian and Monetarist views on the effectiveness of fiscal policy.
What will be an ideal response?
Keynesians believe the aggregate supply curve is rather flat, and the monetarists view it as relatively vertical. As a consequence, expansionary fiscal policy is much more inflationary to Monetarists. In addition, the Monetarists believe the crowding out effect of expansionary fiscal policy is much larger than that argued by Keynesians, rendering fiscal policy ineffective. Keynesians, however, argue that fiscal policy is not only effective because of a small crowding out effect, but fiscal policy is more effective than monetary policy in stabilizing the business cycle.
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One company that retained its monopoly position for years through control of raw materials was
a. Aluminum Company of America (ALCOA). b. Procter & Gamble. c. Ford Motor Company. d. U.S. Steel.
Which of the following may NOT help avoid a financial crisis?
A) Maintaining credible and sustainable fiscal policies B) Regulation and supervision of the financial system C) Disclosure of timely information to lenders, investors, and depositors about key economic variables such as the central bank's holding of international reserves D) Immediately bailing out financial intermediaries and standing ready to bail out others in case a financial crisis occurs E) Maintaining credible and sustainable monetary policies
Liquidity can be defined as the
A. cash value of money. B. value of money adjusted for inflation. C. value of fiat money when used for spending. D. ease with which an asset can be converted to a spendable asset.
In a map showing three indifference curves a consumer is most well off on
A) the curve which is closest to the origin of the coordinate axes. B) the curve which is most farther away from the coordinate axes. C) the curve that is in the middle. D) none of the above.