92. The aggregate demand slopes down to the right because as the price level fal
ID: 1125807 • Letter: 9
Question
92. The aggregate demand slopes down to the right because as the price level falls: a. our income will buy more goods. b. our money will buy more goods. c. we buy less of other goods and more of these goods. d. our expectations change and we decide it is a good time to buy more goods. e. All of the above. 93. Who said that “inflation is always and everywhere a monetary phenomenon”? a. Adam Smith. b. Ludwig von Mises. c. John Maynard Keynes. d. Friedrich Hayek. e. Milton Friedman. 94. Suppose that we are at a long-run equilibrium and suddenly aggregate demand rises. In the short run this will: a. increase prices. b. increase output. c. increase real wages. d. All of the above. e. Both A and B are correct. 95. Monetary policy is likely to be less effective if: a. policies are unexpected. b. wage and price rigidities exist. c. the liquidity effect is weak. d. investment is very responsive to changes in the interest rate. e. velocity is stable. 96. During the 1970s, the velocity of money, as measured by M1, was: a. relatively constant. b. grew at a relatively constant rate. c. fell at a relatively constant rate. d. was very erratic, rising and falling but higher at the end of the 1970s. e. was very erratic, rising and falling but lower at the end of the 1970s. 97. Which of the following is more associated with the Keynesian view than the Monetarist view? a. Recessions are primarily the result of a falling money supply. b. Markets can rebound from a recession rather quickly. c. Monetary policy is weak in fighting a recession in that it works by affecting investment. d. Monetary policy rules should guide monetary policy. e. Balancing the federal government budget while raising spending is likely to be counterproductive. 98. Which of the following combats inflation from the demand side? a. The “cold turkey” approach. b. The use of wage and price contols. c. Tax-based incomes policies. d. Removing barriers that keep wages and prices from falling. e. All of the above. 99. Among the myths about the Great Depression, according to Smiley, is that: a. capitalism failed. b. markets worked quite well. c. the New Deal did little to help the economy. d. Herbert Hoover was actively using government to combat the depression. e. All of the above. 100. Following the initiation of the bank holiday in 1933: a. nearly two in five national banks failed to reopen. b. most big city banks were closed for about sixty days. c. bank depositors continued to withdraw their funds until late in 1935. d. the crisis for the banking sector, for all intents, was over. e. about 99% of all state chartered banks were able to reopen. 101. Which of the following is/are true about the Agricultural Adjustment Administration? a. It established minimum prices on many agricultural crops. b. It killed off millions of pigs and cattle in order to keep prices high. c. It generally transferred wealth from non- farmers to farmers. d. It was struck down as unconstitutional by the Supreme Court. e. All of the above. 102. Christoff-Kurapovna characterizes the “international monetary culture” of the pre-1914 world as: a. gold-based. b. wary of credit. c. contemptuous of public debt. d. contemptuous of private debt. e. All of the above.
Explanation / Answer
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92. a. our income will buy more goods.
Basically with a decline in price, the real income increases which means that our purchasing power increases and hence we buy more goods.
93. e. Milton Friedman.
Milton Friedman said the given statement.
94. b. increase output.
IF the AD increases, then we expect that the output will increase but in long run price level will increase.
95. b. wage and price rigidities exist
Due to wage and price rigidities, the benefit of monetary policy may not be passed since the price variable may not change at all.
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