MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 16, Problem 18SQ
To determine
Whether the argument of velocity of money is highly predictable.
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On which of the following do monetarists and Keynesians disagree?
A. Deflation causes unemployment
B. Wages are sticky
C. High inflation leads to misallocation of resources
D. In the short run, an increase in the money supply boosts economic output
E. C and D
classical economists
a. argued that money supply determined aggregate demand
b. believed that the quantity of money influences interest rates and real wages
c. regarded monetary policy as unimportant since quantity of money does not determine price level.
d. that prices would increase more than proportionate to an increase in money supply
Which is of the following is not a belief of monetarists?
a.In the long-run, inflation is always a monetary phenomenon
b.In the short-run, Fiscal policy is a better instrument of stabilization policy than monetary policy
c.In the short-run, velocity is stable
d.In the long-run, a ten percent increase in the money supply results in a ten percent increase in prices
Early Keynesian thinks that money is less important because
a.High interest elasticity of investment
b.People have less incentive to buy bonds
c.Fiscal Policy is more effective as it is determined by the politicians
d.High interest elasticity of money demand
If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be?
a.All of these answers
b.A decrease in the unemployment rate
c.An increase in the level of output
d.An increase in the rate of inflation
The original Phillips curve…
Chapter 16 Solutions
MACROECONOMICS FOR TODAY
Ch. 16.3 - Prob. 1.1YTECh. 16.3 - Prob. 2.1YTECh. 16.3 - Prob. 2.2YTECh. 16.A - Prob. 1SQPCh. 16.A - Prob. 2SQPCh. 16.A - Prob. 3SQPCh. 16.A - Prob. 4SQPCh. 16.A - Prob. 1SQCh. 16.A - Prob. 2SQCh. 16.A - Prob. 3SQ
Ch. 16.A - Prob. 4SQCh. 16.A - Prob. 5SQCh. 16.A - Prob. 6SQCh. 16.A - Prob. 7SQCh. 16.A - Prob. 8SQCh. 16.A - Prob. 9SQCh. 16.A - Prob. 10SQCh. 16.A - Prob. 11SQCh. 16.A - Prob. 12SQCh. 16.A - Prob. 13SQCh. 16.A - Prob. 14SQCh. 16.A - Prob. 15SQCh. 16 - Prob. 1SQPCh. 16 - Prob. 2SQPCh. 16 - Prob. 3SQPCh. 16 - Prob. 4SQPCh. 16 - Prob. 5SQPCh. 16 - Prob. 6SQPCh. 16 - Prob. 7SQPCh. 16 - Prob. 8SQPCh. 16 - Prob. 9SQPCh. 16 - Prob. 10SQPCh. 16 - Prob. 11SQPCh. 16 - Prob. 12SQPCh. 16 - Prob. 1SQCh. 16 - Prob. 2SQCh. 16 - Prob. 3SQCh. 16 - Prob. 4SQCh. 16 - Prob. 5SQCh. 16 - Prob. 6SQCh. 16 - Prob. 7SQCh. 16 - Prob. 8SQCh. 16 - Prob. 9SQCh. 16 - Prob. 10SQCh. 16 - Prob. 11SQCh. 16 - Prob. 12SQCh. 16 - Prob. 13SQCh. 16 - Prob. 14SQCh. 16 - Prob. 15SQCh. 16 - Prob. 16SQCh. 16 - Prob. 17SQCh. 16 - Prob. 18SQCh. 16 - Prob. 19SQCh. 16 - Prob. 20SQ
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- Which of the following describes the chain of events the Central bank uses to fight recession? A. Raise the monetary policy rate target, sell government securities, decrease reserves and loans, increase aggregate demand.B. Raise the monetary policy rate target, buy government securities, increase reserves and loans, decrease aggregate demand.C. Lower the monetary policy rate target, buy government securities, decrease reserves and loans, decrease aggregate demand.D. Lower the monetary policy rate target, buy government securities, increase reserves and loans, increase aggregate demand.arrow_forwardReal Interest Rate, r (percent) IS H: A. A B. B C. G D. H E. none of the above G Aggregate Output, Y ($ trillions) 8. On the graph above, output is below planned expenditures at point B Topic 8: Monetary Policy and Aggregate Demand 9. If the central bank did NOT follow the Taylor principle, an increase in inflation would lead to A. a higher increase in inflation B. a decrease in the nominal interest rate C. a decrease in aggregate expenditure D. all of the above E. none of the abovearrow_forwardWhich of the following is not a motive for holding money in Keynes's liquidity preference theory? A. The inflation expectations motive. B. The precautionary motive. C. The speculative motive. D. The transactions motive.arrow_forward
- Some economics, notably Keynesians, believe that _______________.Group of answer choices A. since both V and Q are constants for an economy in short-run equilibrium, the equation of exchange becomes the quantity theory of money which explains prices B. even though velocity isnt constant, it is predictable C. If a change in M occurs, it may not only affect P, but also and at the same time affect Qarrow_forward#4 Use the IS-MP model to show what happens when the Federal Reserve raises the federal funds interest rate. #5 Use the IS-MP model to show what happens when there is an increase in inflation expectations.arrow_forwardSuppose a country has a money demand function (M/P)ª = kY, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year. a. What is the average inflation rate? b. How would inflation be different if real income growth were higher? Explain. c. How do you interpret the parameter k? What is its relationship to the velocity of money? d. Suppose, instead of a constant money demand function, the velocity of money in this economy was growing steadily because of financial innovation. How would that affect the inflation rate? Explain.arrow_forward
- policy is when a central bank acts to increase the money supply in an effort to stimulate the economy. Select one: a.Deflationary monetary b.Expansionary monetary c.Contractionary fiscal d.Cyclical monetary e.Countercyclical fiscalarrow_forwardProvide 2 substantive postings to each of the 3 Discussion Question's each week. 1. How is the Federal Reserve is organized? Provide 2 substantive postings to each of the 3 Discussion Question's each week. 2. What are the Fed's major policy tools of interest rates and quantitative easing. Provide 2 substantive postings to each of the 3 Discussion Question's each week. 3. How does the open market committee work & what are the differences between Keynesian and monetarist monetary theories?arrow_forwardState and explain the basic equation of monetarism. What is the major cause of macroeconomic instability, as viewed by monetarists?arrow_forward
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