Monetarists argue that
A. Fiscal policy puts idle money balances to work, which reduces V.
B. When there is a recession, people accumulate money balances, which increases V.
C. The velocity of money increases as much as total spending falls so that MV remains constant.
D. The velocity of money is constant.
Answer: D
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Starting from long-run equilibrium, an increase in autonomous consumption results in ________ output in the short run and ________ output in the long run.
A. higher; higher B. higher; potential C. lower; higher D. lower; potential
If you have $1,000 in wealth and the price level increases by 20 percent, then
A) the $1,000 will buy fewer goods and services. B) the $1,000 dollars will buy 20 percent more goods and services. C) the real value of the $1,000 increases. D) you will be able to buy fewer goods, but the real value of those goods will increase.
When a tax is imposed on an item, it can generally be said that the incidence of the tax is
A. entirely on the buyer. B. entirely on the seller. C. on both the buyer and seller. D. not determined in this manner.
John Maynard Keynes
A. agreed with classical writers that strong automatic pressures drive market economies to full employment. B. focused on attaining the long-run macroeconomic goal of high, but stable economic growth. C. argued that a market economy might become stuck in a short-run equilibrium in which substantial capital and labor lay idle. D. argued that short-run equilibrium occurs only at full employment.