Exam 9: The Monetarist Counterrevolution

A) income.
B) expectations.
C) interest rates.
D) inflation.
E) all of the above.

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A) it must be ready to adjust the interest rate on demand.
B) the monetary authority must exchange money for bonds on demand.
C) it has control of the quantity of money.
D) None of the above

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The spending hypothesis is the Keynesian...

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A) the money supply is constant.
B) real wages are constant.
C) output is constant.
D) the expected price level equals the actual price level.
E) none of the above.

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A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.

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A) low,while monetarists say it is high.
B) unimportant in terms of affecting economic activity,while monetarists disagree.
C) relatively high,while monetarists argue it is low.
D) not a factor in determining if velocity is stable or unstable.

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A) The stock of capital goods
B) The size of the labor force
C) The quality of the labor force
D) The state of technology
E) The quantity of money

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A) the money demand function was unstable; the interest elasticity of money demand was extremely high; and,as a consequence,changes in the quantity of money did not have important predictable effects on the level of economic activity.
B) the money demand function was stable; the interest elasticity of money demand was low; and,as a consequence,changes in the quantity of money did not have important predictable effects on the level of economic activity.
C) the money demand function was unstable; the interest elasticity of money demand was low; and,therefore,changes in the quantity of money did not have important effects on the level of economic activity.
D) the money demand function was stable; the interest elasticity of money demand was high; and,therefore,changes in the quantity of money did have important effects on the level of economic activity.

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A) and the IS schedule are both steep.
B) is flat while the IS schedule is steep.
C) and the IS schedule are both quite flat.
D) is steep and the IS schedule is relatively flat.

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A) low,while Keynesians say it is high.
B) important in terms of affecting economic activity.
C) highly variable.
D) an important factor in determining if velocity is stable or unstable.

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A) looking forwards
B) looking backwards.
C) using all available information.
D) using publicly available forecasts.

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A) M^d = k(r_B,r_E,r_D) Py
B) M^d = k/Py(r_B,r_E,r_D)
C) M^d = Py/k(r_B,r_E,r_D)
D) M^d = (r_B,r_E,r_D) Py/k

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