Exam 39: Current Issues in Macro Theory and Policy

In the view of real-business-cycle theory, an increase in the long-run aggregate supply would lead to a(n)

Given the equation of exchange, if V is stable, an increase in M will necessarily increase

In the rational expectations view, the best approach to fiscal policy is for the government to

Coordination failures occur when people lack some way to jointly coordinate their actions to reach a(n)

According to new classical economists, the

Rational expectations theory considers the aggregate

Most mainstream macroeconomists oppose a strict requirement to balance the federal budget annually because they conclude that such a requirement would

The equation of exchange is MV = PQ.

Which economic perspective typically views the market system as less than fully competitive, and therefore subject to macroeconomic instability?

"Targeting the forecast" is the policy that best describes which of the following views?

Which of the following is a component of the equation of exchange?

Real-business-cycle theory focuses on factors affecting

Monetarists say the velocity of money is highly variable and there is no close link between the money supply and the level of economic activity.

According to rational expectations theory, observed instability in the private economy would most likely be due to

Mainstream economists have adopted some ideas from RET, and some rational expectations assumptions are being incorporated into current macroeconomic models.

Monetarists say

In a full-employment economy, a rise in M will cause inflation unless

Refer to the table.At the $8 wage, labor cost per unit of output is

Dividing nominal gross domestic product (GDP) by the money supply (M) is a way to obtain the

The theory of rational expectations calls for monetary policy rules because