Monetarists believe that
A. Monetary policy is effective only in a recession.
B. The money supply should be expanded at a steady, predictable rate.
C. Interest rates are the critical policy lever.
D. Government spending and taxes are the critical policy levers.
Answer: B
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Refer to the above figure. If real GDP is $4 trillion, then
A) actual investment spending equals $1 trillion as planned investment spending plus unplanned inventory increases equal $1 trillion. B) consumption expenditures are too low. C) unplanned inventories will decrease. D) unplanned inventories will increase.
In a monopsonistic labor market, workers are paid a wage:
a. below their MRP. b. equal to the intersection of MRP and S. c. equal to the MFC. d. equal to the price of the output. e. above their MFC.
Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?
The Fed sells a U.S. government security and a bank dealer writes a check for the amount. When the check clears
A. reserves increase by the amount of the check because the Fed clears the check by increasing the amount of the bank's deposits with the Fed. B. reserves remain unchanged because the decrease of reserves at the dealer's bank is offset by an increase in the reserves at the Fed. C. reserves have fallen by the amount of the reserves times the reserve ratio, and the money supply falls by the difference between the amount of the check and the fall in the reserves. D. reserves have fallen by the amount of the check because the Fed clears the check by reducing the bank's deposits at the Fed.