To reduce the level of unanticipated inflation, monetarists advocate
A. A decrease in short-term interest rates.
B. A sharp increase in short-term interest rates.
C. A decrease in government spending.
D. Steady and predictable changes in the money supply.
Answer: D
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Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?
a. Transit ridership increased in Atlanta following an increase in gas prices. b. Federal tax revenue increased following a decrease in the tax rate. c. Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances. d. Following the imposition of austerity measures, the growth rate of the economy in Greece slowed.
The suggestion that people are "satisficers" is similar to the view that people
a. are wealth-maximizers. b. exhibit "bounded rationality." c. go to a lot of trouble to weigh costs and benefits before choosing a course of action. d. change their minds often.
If an individual prefers X to Y and prefers Y to Z then the consumer must also prefer X to Z. This property is called:
A. transitivity. B. completeness. C. the ranking principle. D. the choice principle.
Suppose that the nominal rate of interest is holding steady at 2 percent even as the anticipated rate of inflation rises. What is happening to the real rate of interest?
A. It equals the nominal interest rate. B. It is increasing. C. It is unchanged. D. It is decreasing.