Question 1

Which of the following would be considered the most prominent monetarist?

Accepted Answer

A)  John Maynard Keynes
B)  Adam Smith
C)  Karl Marx
D)  Milton Friedman
E)  Arthur LafferF) B) and C)
G) A) and B)

Question 2

The main disagreement among economists about the Laffer curve is about whether

Accepted Answer

A)  increases in taxes will decrease GDP.
B)  the effect of tax decreases on GDP will be so big as to raise government revenues when taxes are cut.
C)  cutting marginal tax rates will increase the incentive to work.
D)  the government will collect maximum tax revenue at a 50% tax rate.E) None of the above
F) B) and D)

Question 3

Which equation is incorrect?

Accepted Answer

A)  MV = GDP
B)  PQ = GDP
C)  MV = PQ
D)  10M = 10PE) C) and D)
F) B) and C)

Question 4

The conventional monetary policy to fight recessions would be to

Accepted Answer

A)  increase the rate of monetary growth.
B)  decrease the rate of monetary growth.
C)  run a government surplus.
D)  run a government deficit,increase government spending.E) B) and C)
F) All of the above

Question 5

Monetarists

Accepted Answer

A)  argue for the use of discretionary monetary policy.
B)  contend that government policies have reduced the stability of the economy.
C)  believe a capitalistic economy is inherently unstable.
D)  believe the markets in a capitalistic economy are largely noncompetitive.E) None of the above
F) B) and C)

Question 6

For the equation of exchange to remain in balance

Accepted Answer

A)  changes in P must equal the combined change in M and V.
B)  changes in P must equal changes in V.
C)  changes in Q must equal changes in M.
D)  the equation does not have to balance.E) A) and B)
F) A) and C)

Question 7

According to supply-side economists,when operating in the upper portion of the Laffer curve,tax cuts result in __________.

Accepted Answer

tax revenu...

Question 8

The rational expectations concept is most closely associated with

Accepted Answer

A)  Keynesians.
B)  Monetarists.
C)  Supply-siders.
D)  New classical macroeconomists.E) A) and D)
F) A) and C)

Question 9

Which of the following statements is true?

Accepted Answer

A)  Keynesians believe that consumers are inherently unstable in consumption decisions,but that businesses are relatively stable in making investment decisions.
B)  Monetarists believe in discretionary monetary policy.
C)  Lowering tax rates is the main priority of Supply Side economists.
D)  Rational expectationists argue that businesses have a poor record of anticipating government fiscal policy.
E)  All of the statements are trueF) C) and E)
G) B) and D)

Question 10

Monetarists believe that the private sector of our economy is inherently _____.

Accepted Answer

The answer of Monetarists believe that the private sector of...

Question 11

When interest rates were very low,said Keynes,people would ___________ their money.

Accepted Answer

The answer of When interest rates were very low,said Keynes,people...

Question 12

Given: M = 500,V = 9,P = 10,Q = 450.According to the crude quantity theory of money,if M rises to 700,how much would V,P,and Q be?

Accepted Answer

P would rise (by 40 ...

Question 13

If MV rises from 250 to 375,

Accepted Answer

A)  PQ will fall by 50%.
B)  PQ will remain the same.
C)  PQ will rise by 50%.
D)  PQ will rise by 100%.E) All of the above
F) B) and D)

Question 14

According to monetarists,the main cause of change in the level prices are changes in

Accepted Answer

A)  investment spending.
B)  the money supply.
C)  government budget deficits.
D)  taxes.E) B) and D)
F) A) and D)

Question 15

Statement I: President Reagan in 1981 and President George W.Bush in 2003 used "supply-side" arguments to justify tax cuts.
Statement II: When President George W.Bush signed legislation passing the 2003 tax cut,it represented a return to the Keynesian approach to managing the economy.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) A) and C)
F) None of the above

Question 16

Keynesians

Accepted Answer

A)  believe capitalism is inherently unstable.
B)  contend that government intervention in the economy is undesirable.
C)  advocated a laissez-faire policy.
D)  believe wages and prices are flexible downwarD.
E)  advocate tax cuts to encourage work,savings,and investment.F) A) and B)
G) A) and D)

Question 17

The velocity of money measures the

Accepted Answer

A)  proportion of the money supply which is held as an asset.
B)  ratio of the transactions demand to the asset demand for money.
C)  average annual rate of increase in the money supply.
D)  number of times per year the average dollar is spent on final goods and services.E) A) and B)
F) A) and C)

Question 18

The monetarists think that the growth of the money supply should be approximately equal to the growth of ___________.

Accepted Answer

the econom...

Question 19

If M were 900,V were 12,and P were 12,how much would PQ be?

Accepted Answer

The answer of If M were 900,V were 12,and P...

Question 20

The origin of classical economics was based on the book written by

Accepted Answer

A)  John Maynard Keynes
B)  Milton Friedman
C)  Karl Marx
D)  Adam SmithE) A) and D)
F) All of the above

Exam 15: A Century of Economic Theory

Statement I: President Reagan in 1981 and President George W.Bush in 2003 used "supply-side" arguments to justify tax cuts. Statement II: When President George W.Bush signed legislation passing the 2003 tax cut,it represented a return to the Keynesian approach to managing the economy.

Correct AnswerverifiedShow Answer

The main disagreement among economists about the Laffer curve is about whether

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For the equation of exchange to remain in balance

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When interest rates were very low,said Keynes,people would ___________ their money.

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Monetarists

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If MV rises from 250 to 375,

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Which of the following statements is true?

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Which of the following would be considered the most prominent monetarist?

Correct AnswerverifiedShow Answer

Given: M = 500,V = 9,P = 10,Q = 450.According to the crude quantity theory of money,if M rises to 700,how much would V,P,and Q be?

Correct AnswerverifiedP would rise (by 40 ...View AnswerShow Answer

According to monetarists,the main cause of change in the level prices are changes in

Correct AnswerverifiedShow Answer

Which equation is incorrect?

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The origin of classical economics was based on the book written by

Correct AnswerverifiedShow Answer

The conventional monetary policy to fight recessions would be to

Correct AnswerverifiedShow Answer

If M were 900,V were 12,and P were 12,how much would PQ be?

Correct AnswerverifiedShow Answer

The rational expectations concept is most closely associated with

Correct AnswerverifiedShow Answer

According to supply-side economists,when operating in the upper portion of the Laffer curve,tax cuts result in __________.

Correct Answerverifiedtax revenu...View AnswerShow Answer

Keynesians

Correct AnswerverifiedShow Answer

The velocity of money measures the

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Monetarists believe that the private sector of our economy is inherently _____.

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The monetarists think that the growth of the money supply should be approximately equal to the growth of ___________.

Correct Answerverifiedthe econom...View AnswerShow Answer

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P would rise (by 40 ...
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tax revenu...
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the econom...
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