Assume the central bank decides to pursue contractionary monetary policy. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real credit market with supply of real credit shifting to the right.
b. Start the analysis in the real credit market with aggregate demand for real credit shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the left.
d. Start the analysis in the real credit market with demand for real credit shifting to the right.
e. Start the analysis in the real credit market with supply of real credit shifting to the left.
Question 2 - Which of the following is correct?
a. Monetarists believe there is no short-term link between changes in a nation's money supply and changes in expenditures.
b. Monetarists believe there is an indirect link between changes in a nation's money supply and changes in expenditures.
c. Keynesians believe there is a direct link between changes in a nation's money supply and changes in expenditures.
d. Keynesians believe there is an indirect link between changes in a nation's money supply and changes in expenditures.
e. None of the above.
Question 3 - Assume the central bank decides to pursue contractionary monetary policy. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the right.
b. Start the analysis in the real credit market with demand for real credit shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the right.
d. Start the analysis in the real credit market with supply of real credit shifting to the left.
e. Start the analysis in the real credit market with supply of real credit shifting to the right.
Question 4 - Which of the following is correct?
a. Keynesians believe there is an indirect link between changes in a nation's money supply and changes in expenditures.
b. Monetarists believe there is an indirect link between changes in a nation's money supply and changes in expenditures.
c. Keynesians believe there is a direct link between changes in a nation's money supply and changes in expenditures.
d. Monetarists believe there is no short-term link between changes in a nation's money supply and changes in expenditures.
e. Keynesians believe there is no short-term link between changes in a nation's money supply and changes in expenditures.
Question 5 - Assume the central bank decides to lower the bank's reserve requirements. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real credit market with supply of real credit shifting to the right.
b. Start the analysis in the real goods market with aggregate demand shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the left.
d. Start the analysis in the real credit market with demand for real credit shifting to the right.
e. Start the analysis in the real credit market with supply of real credit shifting to the left.
Question 6 - Which of the following is not a problem with barter?
a. Determining and remembering the prices of everything you want to buy in terms of the goods and services you want to sell.
b. Dividing assets into convenient, small denominations that can be spent.
c. Finding an asset that cannot be duplicated and manipulated by the government.
d. Having a mutual coincidence of wants and surpluses with trading partners.
e. All of the above are problems.
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