Which monetarist idea has been absorbed into mainstream macroeconomics?
A. The net export effect has a stronger effect on fiscal policy than monetary policy
B. Cuts in tax rates significantly increase the productive capacity of the economy over the historical averages
C. Excessive growth in the money supply over long periods leads to inflation
D. The Federal funds rate is a more important monetary target than the money supply
C. Excessive growth in the money supply over long periods leads to inflation
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
If the market value of a firm is $6 billion and the replacement cost of installed capital is equal to $3 billion, then Tobin's q is equal to ________
A) 9 B) 3 C) 18 D) 2
Holding other things constant, a decrease in the inflation rate in the US compared to the Canadian economy may cause the demand for the US dollar to _____________ and the supply to __________
a. Increase; decrease b. Increase, increase c. Decrease; Increase d. Decrease; Decrease
The demand for a service like medical care
a. decreases as income increases, indicating that medical care is an inferior good b. is completely insensitive to price; that is, demand is perfectly inelastic c. is perfectly elastic d. is sensitive to the time component of cost e. varies directly with the price of that care