Exam 25: Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

_____ school of thought would most likely be associated with the statement: "When wages are rigid, changes in output result in small changes in goods market prices and a relatively flat aggregate supply curve."

According to the traditional Keynesian school of thought, expansionary fiscal and monetary policy will:

According to the monetarists, deliberate government intervention:

Monetarists think that the government:

Keynesian economists today favor a model in which the aggregate supply curve is relatively flat at low levels of real GDP and slopes downward as real GDP approaches its potential level.

According to classical economics:

Traditional Keynesians would argue that fluctuations in aggregate demand are closely tied to fluctuations in investment.

The effect lag occurs because it takes policymakers sometime to recognize that a problem exists in an economy.

Which of the following events challenged Keynesian views, and led to the popularity of Milton Friedman's ideas?

The new Keynesians believe that the economy is not always in equilibrium because:

New classical economists advocate less government intervention than the new Keynesian school of thought.

The _____ aggregate supply curve assumed by classical economists means that the equilibrium level of _____ is determined only by the aggregate supply curve.

Who is the leading proponent of the monetarist theory?

In the Keynesian region of the aggregate supply curve:

Monetarists would argue that in the short run, increases in the money supply act to raise both investment and consumption, while also increasing the price level.

Which of the following schools of thought criticized the Fed's policy of targeting interest rates?

According to the monetarists, inflation is primarily caused by an increase in the money supply.

_____ is the theory that was popular before _____ changed the face of economics post Great Depression in the 1930s.

Which of the following promoted legislation that would give private citizens greater information regarding public policymaking?

Traditional Keynesian economists believed that: