Question

Question 1

Fiscal policy will have its greatest impact if monetary policy is __________.

contractionary

expansionary

accommodating

opposing

3. When aggregate demand increases, firms with market power—like Walmart—are MOST likely to raise __________.

prices

output

wages

sales tax

Question 4

The money supply fell during the Great Depression because __________.

the monetary base also fell

the public held less currency, and the banks held less excess reserves

the public held more currency, and the banks held more excess reserves

the Fed did not yet exist

Question 5

Concerning a stable equilibrium, on what issue is there an emerging consensus among economists?

the proximity to equilibrium that can be attained

how long the process toward a stable equilibrium takes

that markets do move toward a stable equilibrium

the government mechanisms that can aid the process to equilibrium

Answer 1

1. Accommodating

Explanation: Fiscal and monetary polices should be accommodating to each other in order to be effective.

3. Prices

Explanation: Firms with market power are price makers rather than price takers.

4. the public held more currency, and the banks held more excess reserves

Explanation: The currency to deposit ratio rose that time.

5. that markets do move toward a stable equilibrium

Explanation: There is a general consensus among economists that economy tends to reach a stable equilibrium.