The view that inappropriate monetary policy was the main reason for the depth of the Great Depression in the United States is most closely associated with
A. the monetarist view.
B. the rational expectations theory.
C. the mainstream view.
D. the real business cycle theory.
Answer: A
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The elasticity of output with respect to capital
A) is the increase in output resulting from an increase in the capital stock. B) is the percentage increase in output resulting from a 1 % increase in the capital stock. C) is always greater than one. D) is the inverse of the elasticity of output with respect to labor.
If the Fed sterilizes the purchase of foreign assets,
A) the monetary base is left unchanged. B) the monetary base rises by the amount of the purchase. C) the monetary base falls by the amount of the purchase. D) the monetary base may rise, fall, or remain unchanged depending on the reaction of domestic interest rates to the purchase.
Assuming a simultaneous reduction in income taxes and transfer payments of $50 billion, then aggregate disposable income will
a. be higher than before. b. be lower than before. c. remain constant. d. None of the above
One reason why a consumer might buy from a high-priced local hardware store instead of going to a big discount store several miles away in another community is that
a. the local store will still have lower money prices b. the time cost of going to the local store is equal to going to the discount store c. comparing the sum of money prices and time cost, the local hardware store is a bargain for people who value time highly d. comparing the sum of money prices and time cost, the local hardware store is a bargain for people who earn low hourly wages e. the time cost of going to the discount store is less than going to the local hardware store