According to monetarists, which of the following would be most important for the control of inflation?
A. a steady increase in federal expenditures
B. the imposition of price controls
C. keeping the growth rate of the money supply low and steady
D. a steady increase in the size of the budget deficit
Answer: C
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If the actual price were below the equilibrium price in the market for bread, a:
A) surplus would develop that cannot be eliminated over time. B) shortage would develop, which market forces would eliminate over time. C) surplus would develop, which market forces would eliminate over time. D) shortage would develop, which market forces would tend to exacerbate.
The role of prices in a market economy is to
a. make producers rich at the expense of consumers b. replicate what society produced in the past c. determine the allocation of resources d. enforce what the government chooses e. force consumers to pay for business profits
Which of the following is a major implication of the invisible hand concept?
A) When directed by competitive market prices, the actions of self-interested individuals will tend to promote overall economic prosperity. B) Prosperity cannot be achieved unless the selfish nature of people can be changed. C) Government-operated firms tend to have lower costs than private sector firms. D) Competition is harmful to the health of an economy because it results in wasteful duplication.
Which of the following would be considered the most prominent monetarist?
A. John Maynard Keynes B. Adam Smith C. Karl Marx D. Milton Friedman