What are the defining features of monetarist macroeconomics and what policies do monetarist macroeconomists recommend?
What will be an ideal response?
Monetarists believe that the economy is self-regulating and will typically operate at full employment if monetary policy is not erratic and the money growth rate is kept steady. The major source of business cycle fluctuations are similar to the Keynesian view, that is, changes in aggregate demand combined with a sticky money wage rate. However, according to monetarists, the changes in aggregate demand are the result of fluctuations in the growth rate of money caused by the Federal Reserve. Monetarists assert that the proper government policies are low taxes, to avoid the disincentive effects stressed by classical macroeconomists, and steady monetary growth.
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Explain the relationship between economic growth and labor productivity
What will be an ideal response?
Special interests are _____ on political issues where they may receive concentrated benefits
a. stable b. cyclical c. rationally ignorant d. not rationally ignorant
When measuring the benefits from investing in human capital
A) the only benefits come from the increase in salary because of going to school. B) in addition to the monetary benefits, the benefit from expanding horizons should be included. C) we must include the costs of tuition and books but not the money made from part-time jobs. D) we must include the foregone earnings in the benefit calculation.
Long-run full-employment equilibrium assumes:
A. ?a downward-sloping production function. B. ?a downward-sloping long-run supply curve (LRAS). C. ?the CPI index price level equals the equilibrium wage rate. D. ?the CPI equals aggregate demand (AD) equals short-run aggregate supply (SRAS) equalslong-run aggregate supply (LRAS).?