Romer and Romer found evidence that money is not neutral because
A. they found no evidence that productivity changes or changes in government spending contributed to business cycles; only monetary changes preceded every recession.
B. they found that inflation was highly correlated with the rate of growth of the money supply.
C. if money were neutral, no one would care what the Fed does.
D. in several episodes, such as 1979-1982, changes in monetary policy led to recessions.
Answer: D
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In the short run, consumers typically ____ to price changes (when compared to the long run)
a. are very responsive b. are more demand sensitive c. are less demand sensitive d. do not respond at all e. overreact
Answer the following statements true (T) or false (F)
1. When there are two candidates on one side of the issues and one candidate on the other side of the issues, it can “split the vote” between supporters of the side with two candidates, handing the election to someone who does not have the support of the majority of voters. 2. A special interest group can pressure legislators to enact public policies that do not benefit society as a whole. 3. Special interests are more likely to arise from a group that is relatively anonymous, rather than from a group where there is already a lot of public scrutiny. 4. The median voter theory argues that politicians will try to match policies to what pleases the majority of voter preferences. 5. The theory of comparative advantage explains that the gains from international trade result from pursuing comparative advantage and producing at a lower opportunity cost.
In a negative income tax program,
a. the government guarantees a minimum level of family income b. a family must pay income taxes on its welfare check c. a family receives a fixed amount of money from the government and its members can keep all income earned through work d. the government reduces the welfare payment by any income earned through work e. a family's income is lower if its members work
Credit cards are
a. a medium of exchange. b. counted as part of M2 but not as part of M1. c. important for analyzing the monetary system. d. All of the above are correct.