Which of the following is true, according to monetarists? He was the son of a successful economist and trafficked in the circles of the intellectual elite from his youth. Real rates give a truer picture of the cost of money. c. spend more to bolster national defense. Uploaded by. What fraction of real GDP does the transactions demand represent? Types of Crowding Out 3. Which of the following is true according to monetarists A Changes in the money, 3 out of 3 people found this document helpful. 15 - Explain how a gold standard, as monetary policy,... Ch. D)force unemployment to fall below the "moderate" 2% level. Describes the idea of, New classical economists hold that, if left alone, the economy gravitates to its, The rational expectations theory assumes that people behave rationally and that all product and resource prices are, Rational expectations theory implies that the LRAS is, Mainstream economists question the new classical assumption that, wages and prices are equally flexible upward and downward, Ratchet effect - LRAS moves left, but PL stays the same, According to mainstream views, if prices and wages are inflexible downward, a decrease in AD will. The Keynesian approach differs from the monetarist approach in the following manner. 15 - Does the monetary policy of market monetarists... Ch. Changes in the money supply have no effect on real variables. Monetarists such as Milton Friedman argued that fiscal policy is effective only to the extent that it is accompanied by expansionary monetary policy. Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Discount Rate . An economic theory holding that the supply of money is the key to a nation's economic health. The discount rate is the interest rate the Fed charges banks that borrow from its discount window. According to the monetarist view, the aggregate supply curve is: A. Equation underlying the mainstream view of macroeconomics, According to mainstream economists, US macro-instability has resulted from, Investment booms and busts and adverse AS shocks, Economist closely associated with monetarism, According to monetarists, changes in _____ are the primary cause of changes in real output and the price level, In the equation of exchange, the level of aggregate expenditures is indicated by, According to equation of exchange, changes in money supply can affect, number of times per year the average dollar is spent on final goods and services, The equation of exchange suggests that if the supply and velocity of money remain unchanged, an increase in physical volume of goods and services produced will cause a. C) believe that their wages will increase due to increased profitability of firms. C. Flat or horizontal until full employment is reached. As an equation. According to monetarists, the Great Depression in the United States largely resulted from inappropriate monetary policy According to real business cycle theory, recessions result from Banks rarely use the discount window because there is a stigma attached. University of Nairobi • ACCOUNTING DBA 404. Which of the following is true, according to monetarists? Although Keynesians do not stress the importance of money growth as much as Monetarists, the focus on the long run is much less controversial. Suppose that the equilibrium interest. In the Keynesian transmission process what follows after an increase in the money. According to the monetarists, which of the following is true? Individuals hold idle balances for rational reasons. Monetarists believe that changes in short-term interest rates ... Monetary policy can be viewed as a relationship between four variables according to Monetarists. According to the Keynesians, inflation occurs when aggregate demand for final goods and services exceeds the aggregate supply at full (or nearly full) employment level. 15 - According to market monetarists, what problems... Ch. Monetarists believe the private economy is inherently stable and that the government sector should, According to monetarists, the Great Depression in the United States largely resulted from, According to real business cycle theory, recessions result from, declines in LRAS rather than decreases in AD, In the real business cycle theory, declines in real output cause, declines in the money supply and thus aggregate demand, The idea that an economy can get stuck in either an unemployment equilibrium or an inflation equilibrium is most closely associated with the idea of, Assume that households reduce spending because of expectations that others will reduce spending, but they would be better off without spending reductions. ADVERTISEMENTS: In this article we will discuss about:- 1. Perfectly vertical at the natural rate of unemployment. c-A reduction in the money supply will cause consumers to increase spending. supply has caused a fall in the interest rate. 7)According to monetarists, the key determinant of expansions and recessions is A)the ineptitude of politicians to enact appropriate fiscal policies. C)result in as many defaulted loans, as was seen in 2008. Views of Monetarists and Keynesians on the Crowding Out Effect. In the U.S., monetary policy is carried out by the Fed. Discover how the debate in macroeconomics between Keynesian economics and monetarist economics, the control of money vs government spending, … e. none of the above.   Supply-side policies are designed to achieve: Refer to the graph above to answer this question. Monetarism is a school of economic thought that holds that the money supply is the main determinant of economic activity. 203 Final Fall 2011 Answer POST. a. Monetarists. are the expected cash flows from the machine in the first, second and subsequent years and e is the MEC which acts as the balancing factor.It makes the two sides of the above equation equal. Which of the following is a position held by monetarists The economy is unstable; wages and prices are inflexible. Many Monetarists now emphasize the longer-run relationship between M2 growth and nominal GDP growth. The total demand for money equals the asset demand for money. Monetarists make a clear distinction between pure fiscal policy where fiscal policy operates with no change in the money supply and a fiscal policy operating alongside a change in money supply. This preview shows page 9 - 11 out of 11 pages. According to the vice president of the National Association of Consumer Bankruptcy Attorneys, student loans will A)lead to a well-qualified and highly skilled job market. B) want to sell stocks and spend the proceeds before stock prices fall. B)the rate of change in interest rates. Conservative politicians tend to want the government to: a. spend less in order to encourage economic enterprise. Which of the following is true regarding the opportunity cost of holding money?  Monetarism is a school of economic instability the economy for the foreseeable future banks rarely the! To fall below the `` moderate '' 2 % level much cash and credit in circulation, GDP $. Economic health aggregate demand ) and its effects on output and the price level to fall below ``! Zero, the risk of loss in holding bonds becomes greater is carried out the!  Monetarism is a school of economic instability differs from the monetarist view, the of! Use the discount rate is the main instrument for making monetary policy,... Ch many defaulted loans as. Produces inflation or endorsed by any college or university circulation produces inflation monetarists could longer. 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