Monetary policy can influence interest rates, which in turn can change spending.
a. True
b. False
Indicate whether the statement is true or false
Question 2Milton Friedman is widely considered to be the father of monetarism.
a. True
b. False
Indicate whether the statement is true or false
Question 3If the elasticity of supply for a good is greater than the government expected:
a. Consumers will bear more of the burden of the tax than the government expected.
b. Producers will bear more of the burden of the tax than the government expected.
c. The tax will raise more revenue than the government expected.
d. Both a. and c. are true.
Question 4Higher rates of interest increase the opportunity cost of holding money balances.
a. True
b. False
Indicate whether the statement is true or false
Question 5The primary difference between new Keynesian economics and traditional Keynesian economics is that the former is more realistic about international trade, whereas the latter stresses the importance of inward oriented strategies.
a. True
b. False
Indicate whether the statement is true or false
Question 6If the elasticity of demand for a good is greater than the government expected:
a. Consumers will bear more of the burden of the tax than the government expected.
b. Producers will bear more of the burden of the tax than the government expected.
c. The tax will raise less revenue than the government expected.
d. Both b. and c. are true.
Question 7The money supply is very sensitive to changes in the rate of interest.
a. True
b. False
Indicate whether the statement is true or false
Question 8According to the new Keynesian school of thought, fiscal policy is a completely ineffective tool in combating supply-side shocks.
a. True
b. False
Indicate whether the statement is true or false
Question 9The government proposes a tax on flowers in order to boost its revenue. If the elasticity of demand is 1.3 and the elasticity of supply is 0.7:
a. Consumers will bear the majority of the burden of the tax.
b. Producers will bear the majority of the burden of the tax.
c. Consumers and producers will bear equal shares of the burden of the tax.
d. It does not tell us enough to reveal whether consumers or producers will bear most of the burden of the tax.
Question 10If you deposit 8,000 in a bank, calculate how much the bank must keep as required reserves and how much it can loan out if the required reserve ratio was 5 percent. If it was 8 percent? 13 percent? 26 percent?
Question 11New Keynesians argue that a decrease in government spending reduces inflation.
a. True
b. False
Indicate whether the statement is true or false
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