Macroeconomics
Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 15, Problem 16QP
To determine

The problems arising from decline in nominal GDP.

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True or False? In an assigned reading, Milton Friedman indicated that he agreed with John Maynard Keynes's explanation of the causes of the Great Depression. True False As discussed in class, which of the following was argued by monetarists of the 1970s? in a free market economy, central banks can never effectively manipulate money supply, because lending activity is subject to rapid changes an expansion of the money supply that is less than the growth of output during the same period will generally result in deflation O effects of changes in money supply are seen in output before they are seen in prices central banks should focus on minimizing the legal interest rates paid to depositors, as ensuring the safety of banks was the most important goal
According to Monetarism, when does an increase in money supply change both Real GDP andprice level? In the short run or in the long run? Explain your answer using a diagram.
According to Monetarists, what should the government do if unemployment is 4% and inflation is 12%? Select one: a. Decrease the supply of money b. Decrease government spending c. Raise taxes d. Do nothing e. Lower interest rates
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