To stabilize the economy, monetarists and rational-expectations economists:
A. Would like a monetary rule to be adopted
B. Would like to see coordination failures eliminated
C. Recommend the use of discretionary fiscal policy
D. Recommend the use of discretionary monetary policy
A. Would like a monetary rule to be adopted
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In Keynes's liquidity preference framework, if there is excess demand for money, there is
A) an excess demand for bonds. B) equilibrium in the bond market. C) an excess supply of bonds. D) too much money.
The Board of Governors of the Federal Reserve System is the key decision maker for monetary policy.
a. true b. false
In an economy where planned aggregate spending is given by PAE = 3,000 + .75Y ? 10,000r, the central bank is currently setting the interest rate at 0.06 (6 percent). If potential output equals 9,500, the central bank must ________ the interest rate to close the ________ gap.
A. lower; recessionary B. lower; expansionary C. raise; expansionary D. raise; recessionary
A change in consumption spending caused by income changes is ________ change in spending, and a change in government spending that occurs to improve roads and bridges is ________ change in spending
A) an autonomous; an induced B) an induced; an autonomous C) a contractionary; an expansionary D) an expansionary; a contractionary