The Great Depression of the 1930s opened the door to the ________ revolution in macroeconomic theory
A) Keynesian
B) old classical
C) New Keynesian
D) New classical
A
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Money supply is linked to the monetary base by the money multiplier. Macroeconomic textbooks tell you that the central bank cannot control the money supply, but it can control the monetary base
As a result, you decide to specify a distributed lag equation of the growth in the money supply on the growth in the monetary base. One of your peers tells you that this is not a good idea for modeling the relationship between the two variables. What does she mean? What will be an ideal response?
Assume that a firm's marginal revenue just barely exceeds marginal cost. Under these conditions the firm should:
a. expand output. b. contract output. c. maintain output. d. There is insufficient information to answer the question.
Monopolistically competitive firms could reduce the average total cost of producing by increasing output; therefore, these firms have
On January 1, 2001, El Salvador "dollarized" its economy. The U.S. dollar circulated throughout the country along with the Salvadoran colon for the first year. By the end of 2002, the official currency circulating in the economy was the U.S. dollar. El Salvador abandoned its own currency and adopted the currency of the United States because:
A. the government would still be able to finance deficits by printing U.S. dollars, and inflation would be under control. B. the government would still be able to run deficits by printing money. C. with dollars, monetary policy would be more effective at offsetting demand shocks in the economy. D. the government would no longer be able to finance deficits by printing money, and inflation would be under control.