Question 1

The routes or channels that ripple effects created in the money market travel to impact the goods-and-services market are known as

Accepted Answer

A)  the transmission lag.
B)  monetary policy.
C)  the liquidity trap.
D)  the transmission mechanism.

Question 2

A change in the money supply will change investment when

Accepted Answer

A)  the money supply is a function of the price level.
B)  investment is interest-sensitive.
C)  investment depends only on the level of GDP.
D)  investment is interest-insensitive.
E)  the supply for money is a function of the interest rate.

Question 3

Under conditions of a liquidity trap and interest-insensitive investment, Keynesians would be most likely to propose __________ policy to eliminate a recessionary gap.

Accepted Answer

A)  expansionary fiscal
B)  contractionary fiscal
C)  expansionary monetary
D)  contractionary monetary

Question 4

The economy is in the horizontal portion of the AS curve, there is no liquidity trap and investment is sensitive to changes in the interest rate. According to the Keynesian transmission mechanism, if the money supply drops the interest rate will __________, investment spending will __________, the AD curve will shift to the __________, and the price level will __________.

Accepted Answer

A)  rise; fall; left; rise
B)  fall; rise; right; rise
C)  rise; fall; left; not change
D)  fall; fall; left; fall
E)  rise; rise; left; fall

Question 5

Activists

Accepted Answer

A)  probably favor economic fine-tuning.
B)  favor rules-based monetary policy.
C)  argue for the deliberate use of monetary and fiscal policies to smooth out the business cycle.
D)  argue against the deliberate use of monetary and fiscal policies to manage the economy.
E)  a and c

Exam 15: Monetary Policy

A change in the money supply will change investment when

Correct Answer
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Activists

Correct Answer
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Correct Answer
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The routes or channels that ripple effects created in the money market travel to impact the goods-and-services market are known as

Correct Answer
verified

Under conditions of a liquidity trap and interest-insensitive investment, Keynesians would be most likely to propose __________ policy to eliminate a recessionary gap.

Correct Answer
verified

Exam 15: Monetary Policy

A change in the money supply will change investment when

Correct AnswerverifiedShow Answer

Activists

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The routes or channels that ripple effects created in the money market travel to impact the goods-and-services market are known as

Correct AnswerverifiedShow Answer

Under conditions of a liquidity trap and interest-insensitive investment, Keynesians would be most likely to propose __________ policy to eliminate a recessionary gap.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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