Exam 17: Macroeconomics: Events and Ideas

When interest rates are very high, the economy is in a liquidity trap, and monetary policy may be ineffective in fighting a recession.

Unlike the majority of countries in the world, ______experienced interest rates close to zero since the 1990s.

The General Theory of Employment, Interest, and Money was written by:

If the unemployment rate rose, a classical economist would counsel the government to do nothing.

Nearly all economists agree that increases in money supply can _____ aggregate _____.

_____ was a _____ economist who believed that _____ in wages and prices could block adjustments to full employment.

The political business cycle does NOT imply that:

Policy makers before the Great Depression were:

To close an inflationary gap, the Great Moderation consensus on macroeconomics suggests that:

A policy implication of monetarism is that:

The classical macroeconomists believed that fiscal policy was even less effective than monetary policy.

Classical macroeconomists believed that government could reduce the unemployment rate to a permanently low rate.

The period of relative calm in the economy between 1985 and 2007 is called the Great Moderation.

Friedman argued that with a _____ money supply, velocity is _____ that there's not much point in using monetary policy.

In the classical model, an increase in the money supply will result in:

Real business cycle theory suggests that changes in _____ are the primary cause of business cycles.

According to the classical model, prices are _____, making the aggregate supply curve _____ in the short run.

One argument in favor of quantitative easing is that:

Which school of thought believes that expansionary monetary policy has very little or no effect on output? I. Keynesian macroeconomics II) Great Moderation consensus

Monetarists argued that fiscal policy was ineffective if the money supply increased.