"B"
Monetary policy is neutral in the long run but it will have a profound effect on the output and real variables in the short run.
Which statement best characterizes the effects of monetary policy? Monetary policy is neutral in both the...
16. Which statement best characterizes the effects of monetary policy? (1 mark) a. Monetary policy is neutral in both the short run and the long run; therefore, it does not affect real variables. b. Monetary policy is neutral in the long run, but it may have effects on real variables in the short run. c. Monetary policy has profound effects on real variables in both the short run and the long run. d. Monetary policy has profound effects on real...
Which statement best defines the velocity of money? (1 mark) a. It is the rate at which the central bank puts money into the economy. b. It is the long-term growth rate of the money supply. c. It is the money supply divided by nominal GDP. d. It is the average number of times per year a dollar is spent. In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in...
4. Which of the following statements about monetary neutrality is accurate? (x) Printing money to finance government expenditures has profound effects on real variables in the long run, but is neutral in the short run. (y) Although monetary policy is neutral in the long run, it may effect real variables in the short run. (z) In the long run when money is neutral, nominal interest rates increase when the money supply growth rate increases, but real interest rates do not....
9. What does the evidence from hyperinflations indicate with respect to the quantity theory of money? (1 mark) a. Evidence shows that money growth and inflation moved together, which supports the quantity theory. b. Evidence shows that money growth and inflation moved together, which does not support the quantity theory. c. Evidence shows that money growth and inflation did not move closely with each other, which supports the quantity theory. d. Evidence shows that money growth and inflation did not...
Describe the effects of contractionary monetary policy by the domestic central bank on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model in the short run. What happens in the long run? (Word Limit: 100 words)
Use of discretionary policy to stabilize the economy Should policymakers use monetary policy, fiscal policy, or both in an effort to stabilize the economy? The following questions address the issue of how monetary and fiscal policies affect the economy and the pros and cons of using these tools to lessen economic fluctuations. The following graph shows a hypothetical aggregate demand curve (AD), short-run aggregate supply curve (AS), and long-run aggregate supply curve (LRAS) For the economy in May 2020. According to the...
52. Studying alternative theories of how people form expectations is particularly relevant to monetary policy because A. if people fully expect inflation to occur, the effects of monetary policy are more widespread. monetary policy can only have real effects on the economy if people fully expect inflation. c. unexpected inflation cause prices to be flexible. d. the effects of expected inflation are completely different from the effects of unexpected inflation e expected inflation causes prices to become sticky. 53. Monetary...
An economy is initially at potential output, in the long run, expansionary monetary policy is expected: a) not to affect output in the long run b) not to affect output in either the short run or the long run c) to affect output, but only in the long run d) to affect output in both the short run and the long run Which of the following monetary policies likely decreases aggregate demand and, in the short run, output? a) A...
6. The long-run effects of monetary policy The following graphs show an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run (LR) and short-run (SR) Phillips curves. The point on each graph shows the economy's current position. According to the graphs, potential output in this economy is _______ and the natural rate of unemployment is _______ .Suppose the central bank of the economy decreases the...
The graph shows the effects of an expansionary monetary policy, which, over time, results in shifts of both the aggregate demand curve (AD1 to AD2) and the short-run aggregate supply curve (SRAS1 to SRAS2) If the dot indicates the economy's initial equilibrium state, place a second dot to show the economy's new equilibrium in the short run, given that the monetary policy move was completely expected. To refer to the graphing tutorial for this question type, please click here. Price...