In the extended classical model, an unanticipated increase in the money supply would cause output to ________ and the price level to ________ in the short run.
A. decrease; decrease
B. remain unchanged; increase
C. decrease; remain unchanged
D. increase; increase
Answer: D
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Friedman's theory of money demand differs from Keynes' in that
a. Friedman assumes that the demand for money is highly elastic while Keynes assumes money demand is inelastic. b. Friedman assumes that the money demand function is highly stable while Keynes assumes it is unstable. c. Friedman assumes that there is only a speculative demand for money while Keynes also considers the precautionary and transactionary demands for money. d. Friedman assumes that the proportion of income held in the form of money is constant while Keynes believes it varies. e. both b and d.
The real GDP data could be properly thought of as a(n)
What will be an ideal response?
Wealth decreases as a result of ________ and/or ________.
A. positive saving; capital gains B. negative saving (borrowing); capital gains C. negative saving (borrowing); capital losses D. negative saving (borrowing); crowding out
Tobin's q theory suggests that monetary policy may affect investment spending through its impact on
A) stock prices. B) interest rates. C) bond prices. D) cash flow.