1.In the rational expectations view, Multiple Choice a.discretionary policy tend
ID: 1117056 • Letter: 1
Question
1.In the rational expectations view,
Multiple Choice
a.discretionary policy tends to be countercyclical.
b.wages are flexible downward but prices are inflexible downward.
c.discretionary policy tends to be ineffective.
d. prices are flexible downward but wages are inflexible downward.
2.
At the equilibrium level of GDP,
Multiple Choice
a.MV = real GDP.
b.V = 1/MPS.
c.M = nominal GDP.
d. MV = nominal GDP.
3.
A contraction of the money supply
Multiple Choice
a.lowers both the interest rate and aggregate demand.
b.lowers the interest rate and increases aggregate demand.
c.increases both the interest rate and aggregate demand.
d, increases the interest rate and decreases aggregate demand.
4.
Unemployment rates in the United States from 2005 to 2015 were in the range of
Multiple Choice
a.4.4 percent to 9.9 percent.
b.9.8 percent to 12.4 percent.
c.12.5 percent to 15.7 percent.
d. 1.5 percent to 4.5 percent.
5.
The velocity of money measures the
Multiple Choice
a.average annual rate of increase in the money supply.
b.proportion of the money supply held as an asset.
c.ratio of the transactions demand to the asset demand for money.
d. number of times per year the average dollar is spent on final goods and services.
Explanation / Answer
1.c.
Rational expectation views is based on adaptive expectations about future which makes discretionary policy ineffective. For example if you expect future inflation and increase present demand, inflation will occur now.
2. C.
As per quantity theory of money, mv = py where m is quantity of money, v is velocity of money, p is price and y is real gdp. Py is nominal gdp, so at equilibrium mv = nominal GDP
3. D.
Contraction in money supply leads to decrease in money supply which decreases aggregate demand while interest rate increases so that people do not demand more money.
5. D
Velocity of money is the number of times money changes hands.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.