According to Keynesians, an increase in the money supply will have its least impact on GDP when the aggregate demand curve intersects:
A. the horizontal portion of the aggregate supply curve.
B. the vertical portion of the aggregate supply curve.
C. the upward sloping portion of the aggregate supply curve.
D. either the horizontal or upward sloping portion of the aggregate supply curve.
Answer: B
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Under the assumptions of the new Keynesian model, an increase in aggregate demand will
A) increase prices and output in the short-run. B) lead to a decrease in unemployment and an increase in prices in the short run. C) lead to an increase in the nominal wage rate in the long run and a decrease in unemployment in the short run. D) All of the above are correct.
The "New Deal" programs of the 1930s aimed at
(a) transforming American capitalism into a planned socialist economy. (b) introducing short-term measures to cure the depression but no fundamental changes in the American economy. (c) introducing measures to deal with the crises and cure the depression combined with measures to restructure important aspects of the economy and increase the role of government in it. (d) reintroducing laissez-faire policies (non-government intervention) like those that had worked in the 19th century.
Which of the following is true about the equation of exchange??
a) The equation of exchange can be presented as: M + V = P + Q. b) Velocity represents the average number of times that a dollar is used in purchasing final goods or services in a one-year period. c) ?If M decreases, and V increases, then P must rise and/or Q must rise. d) All of the above are true about the equation of exchange.
Although economic science can contribute theoretical and factual knowledge on a particular issue, the final decision on policy questions often depends on
A. information that is not currently available. B. social judgments. C. ethical norms. D. All of these responses are correct.