Keynesians believe that to help ensure full employment production, we should use
A) both counter-cyclical monetary and fiscal policy.
B) a money supply rule and counter-cyclical fiscal policy.
C) counter-cyclical fiscal policy only.
D) counter-cyclical monetary policy only.
A
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Explain how low levels of living can turn into a vicious cycle in developing countries
What will be an ideal response?
One cost of a perfectly anticipated inflation is that it
A) transfers wealth from lenders to borrowers. B) transfers wealth from borrowers to lenders. C) increases menu costs. D) damages the role of prices as signals in the economy.
At full-employment GDP,
A) the long-run aggregate demand curve is horizontal. B) the long-run aggregate demand curve is vertical. C) the long-run aggregate supply curve is horizontal. D) the long-run aggregate supply curve is vertical.
Refer to Figure 12.5. If exchange rates are floating, an expansionary monetary policy would best be represented by a movement from ________ in panel (a) and a corresponding movement from ________ in panel (b)
A) point A to point B; point X to point Y B) point C to point A; point X to point Y C) point D to point C; point Y to point X D) point B to point D; point Y to point X