Effective expansionary monetary policy, according to Keynesian theorists, will do all of the following except
A. Increase bank lending capacity.
B. Lower real output.
C. Reduce interest rates.
D. Encourage people to borrow and spend money.
Answer: B
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In a closed economy, a decrease in the money supply will
A) shift the aggregate demand schedule to the left. B) shift the aggregate supply schedule to the right. C) shift the IS curve to the left. D) shift the LM curve to the right.
Monetary policy will be
a. less effective the higher the interest elasticity of investment, and thus the steeper the IS schedule. b. more effective the higher the interest elasticity of investment, and thus the flatter the IS schedule. c. equally effective regardless of whether or not the interest elasticity of investment is higher or lower, or the IS curve is flatter or steeper. d. more effective with a vertical IS curve.
Most economists support the infant-industry argument because it is so easy to implement in practice
a. True b. False Indicate whether the statement is true or false
One implication of the median voter model is that candidates running for political office take polls because
A) everyone does it. B) they want to know if they should maintain their current positions or modify them. C) it is good public relations, since if the public learns that the candidate is taking polls, the public will feel that the candidate cares what it thinks. D) taking polls is tax deductible. E) none of the above