According to classical macroeconomic theory, the flexible interest rate
A. is the incentive that encourages businesses to obtain credit.
B. will tend to fall when the quantity of credit demanded exceeds the quantity of credit supplied.
C. will tend to rise when the supply of credit exceeds the demand for credit.
D. ensures that saving cannot exceed investment spending for extended periods of time.
D. ensures that saving cannot exceed investment spending for extended periods of time.
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In Keynes's liquidity preference framework, individuals are assumed to hold their wealth in two forms
A) real assets and financial assets. B) stocks and bonds. C) money and bonds. D) money and gold.
When Xt is strictly exogenous, the following estimator(s) of dynamic causal effects are available:
A) estimating an ADL model and calculating the dynamic multipliers from the estimated ADL coefficients B) using GLS to estimate the coefficients of the distributed lag model C) neither (a) or (b) D) (a) and (b)
The limits of the terms of trade between two countries are determined by those countries' opportunity costs of production
a. True b. False
In the classical view, flexible wage rates would assure
A. low inflation. B. high secular inflation rates. C. high rates of unemployment. D. full employment.