Contrast the Keynesian and Monetarist views on how a change in the money supply impacts the economy.
What will be an ideal response?
According to Keynesian economists, an increase in the money supply will reduce interest rates, stimulate borrowing and spending, shifting the aggregate demand curve to the right, which increases real GDP (if we are not already at full employment). The impact of this expansionary monetary policy on inflation depends on which range we are in along the aggregate supply curve.
Monetarists, using the quantity theory of money, believe a change in the money supply has a much more direct and predictable impact on the economy. The monetarists do not see a change in the money impacting the economy by first effecting interest rates.
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Explain the relationship(s) between full employment, cyclical unemployment, the natural unemployment rate, and potential GDP
What will be an ideal response?
Straight Cut beauty salon merges with Clean-Cut beauty salon. This is an example of
A) conglomerate merger. B) concentration ratio. C) vertical merger. D) horizontal merger.
Schleppsi, a soft drink maker, is a monopsonist in the county where it manufactures all of the Diet Schleppsi it produces. Suppose the current daily labor cost to the firm is $35,000 with 99 workers and the total wage cost with 100 workers would be $36,000 . What will the market wage be if Schleppsi hires the 100th worker?
a. $35. b. $36. c. $100. d. $350. e. $360.
Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking: (check all that apply)
a. economic generalizations. b. the law of supply. c. the other-things-equal assumption. d. ceteris paribus. e. marginal analysis.