48. Mainstream economists and monetarists B. Monetarists also believe output Y is fixed. FALSE AACSB: Analytical Blooms: Level 1 Remember Difficulty: 1 Easy Learning Objective: 19-03 Discuss why new classical economists believe the economy will "self-correct" from aggregate demand and aggregate supply shocks. Monetarists believe that the objectives of monetary policy are best met by targeting the growth rate of the money supply. Monetarists believe in a set of "rules" that the Federal Reserve must follow. (III.11) Monetarists believe that changes in the supply of money. Which of the following believes that the money supply is the critical policy lever? Monetarist: A monetarist is an economist who holds the strong belief that the economy's performance is determined almost entirely by changes in the money supply. 113.Which of the following groups of economists believe that cost-push inflation is impossible in the long run without excessive monetary growth? Some monetarists believe that the Federal Reserve and other central banks should simply let the money supply grow at the rate the gross domestic product, a measure of total economic activity, is expected to grow, essentially taking a hands off approach. Monetarists believe that in the short-term velocity (V) is fixed This is because the rate at which money circulates is determined by institutional factors, e.g. … A. Answer: C Type: Basic Understanding Page: 390 38. Monetarists also see monetary policy operating through the indirect mechanism. Monetarists believe that changes in the money supply affect the level of production in a country in the short-run but only affect the price-level in the long run. Money can be controlled – monetary authorities can increase or decrease the amount of money in the economy. Owa state de us mail 1 . a. do not affect aggregate demand. c. Monetarists believe that the economy will settle into long-run equilibrium at less than full employment output. Compare Search ( Please select at least 2 keywords ) Most Searched Keywords. prof Friedman and monetarists believe that: private economy is inherently stable and attribute most if not all economic fluctuations to the destabilizing effects of misguided large and rapid changes in the money stock . 0 out of 2 points. Show ticker on facebook 3 . 2. b. affect aggregate demand through the loanable funds market only. In particular, Monetarists prefer the Money growth rule: The Fed should be required to target the growth rate of money such that it equals the growth rate of real GDP, leaving the price level unchanged. In a recession, monetarists believe: A) Velocity varies in response to fiscal policy. Monetarist Theory: The monetarist theory is an economic concept which contends that changes in the money supply are the most significant determinants of the … Monetarists are certain the money supply is what controls the economy, as their name implies. Milton Friedman admitted it might vary a little but not very much so it can be treated as fixed. Bristol myers squibb clinical trial 7 . C. The money supply should be expanded at a steady, predictable rate. They believe the expansion of the money supply will end recessions and boost growth. D. Government spending and taxes are the critical policy levers. As money supply (Ms) changes, so do these macroeconomic variables. Monetarists like Milton Friedman blame the Depression on high-interest rates. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - DISC: Understanding and applying - DISC: … 19-4. This largely, if not entirely, explains why money exerts a dominant influence on nominal income. New visions global 1 8 . The Regressive Expectations Model: According to Keynes the demand for money refers to the desire to hold money as an alternative to purchasing an income-earning asset like a bond. Question 5. Interest rates are the critical policy lever. d. affect aggregate demand directly. Monetarists believe that quizlet. Ventura county human services 4 . A summary of Keynesian and Classical views. Monetarists stress the role of the natural rate of unemployment. c. affect only the investment component of aggregate demand. Monetarists /classical economists believe wages are more flexible and likely to adjust downwards to prevent real wage unemployment. Monetarists call for low taxes and consistent money growth because Monetarists believe that recessions are the result of fluctuations in the quantity of money. how often workers are paid does not change very much. Question: Monetarism and Keynesian economics both: a. A) Increase government spending. Answer Key Testname: FINAL 32) The figure above shows the effect of the increase in the U.S. interest rate. Monetarists stress the importance of controlling the money supply to keep inflation low. As a means of combating persistent periods of inflation or deflation, monetarists argue in favor of a fixed money supply rule. b. Monetarists claim that monetary policy is the real driver of the business cycle. 9. Monetarists believe that the velocity of money is highly stable. Mainstream economists contend that monetary policy tends to be destabilizing, in contrast to monetarists who believe that monetary policy is a stabilizing factor. Simply speaking, M 1 and the gross national product are not what they used to be arid because velocity equals GNP divided by M 1, changes in the numerator and denominator can make a big difference. True b. The monetarists believe that the direction of causation is from left to right in the equation; that is, as the money supply increases with a constant and predictable V, one can expect an increase in either P or Q. Start studying Macro. Mainstream economists and rational expectations economists C. Monetarists and rational expectations economists D. Mainstream economists, monetarists, and rational expectations economists 114. Monetarists, such as Friedman, believe that: Money can be defined – money is defined as ‘anything generally acceptable with which to settle a debt’. Question 10 Faced with a choice between fiscal and monetary policy to try and increase aggregate demand, monetarists believed that monetary policy would have more effect. a. This is in contrast to the "Keynesian" view which believes that changes in the money supply directly affect interest rates, and through it indirectly income, employment and output in the economy. Monetarists believe that changes in the supply of money a. do not affect aggregate demand. ANSWER: d POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - … b. affect aggregate demand through the loanable funds market only. Which of the following is the monetarist policy for fighting a recession? Best elementary schools in gwinnett county 2 . Some monetarists believe that the velocity’s unexpected behaviour in recent years has to do with problems of definition or measurement. Monetarists not only sought to explain present problems; they also interpreted historical ones. Keynesians believe that the key to both a healthy economy and correcting recessions and depressions is doing whatever it takes to entice consumers to continue spending. b. Monetarists believe that the velocity of money is predictable. Classic fedora hats for men 6 . The investment schedule shows the: Answers: Inverse relationship between the expected rate of return and the quantity of investment demanded. × = ×. D) All of the above. Monetarists believe that central banking is necessary to promote equilibrium in supply and demand; the belief that businesses, not government programs, are the key to balance in an economy (“trickle-down theory”; corporate profit will make it rain on the rest of society; money flow should be the only concern of economists and governments) They hold that this mechanism is more powerful than the traditional Keynesians believe it to be. They believe that money directly affects prices, output, real GDP and employment in the economy. c. affect only the investment component of aggregate demand. Different views on fiscal policy, unemployment, the role of government intervention, the flexibility of wages and role of monetary policy. Monetarists believe that: A. The demand for dollars increases and the = + +. Monetarists believe that an increase in the money supply will raise both Real GDP and the price level in the short run, and will only raise Real GDP in the long run. d. affect aggregate demand directly. Monetary policy is only effective in a recession. B. Armstrong axiom vector trim 5 . C) Fiscal policy is ineffective. Monetarists … The Monetarists’ View: The monetarists believe that the LM curve is quite steep, although not vertical. Nearly all Keynesians and monetarists now believe that both fiscal and monetary policies affect aggregate demand. Monetarists believe that changes in the money supply affect the level of production in a country in the short-run but only affect the price-level in the long run. d. Monetarists believe that output can be at less than full employment output in the short run. They believe that controlling the supply of money directly influences inflation and that by … Chapter 19- Theory versus Reality 21. 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