5. A Monetarist’s belief in the role of government in a free society is essentia

ID: 1207655 • Letter: 5

Question

5. A Monetarist’s belief in the role of government in a free society is essentially:

That government is needed to do things that the market can’t do, or cannot do efficiently.

That no matter how well-meaning a government program may be, it comes with inherent costs to society.

That government is needed to protect the rights of children.

All of the above are true.

None of the above are true.

_____6. The bottom line to Fredman’s opposition to monopolies is that:

Monopolies cause higher prices than would otherwise exist in a competitive market.

Monopolies create a limitation of voluntary exchange through a reduction in the alternatives available to individuals.

Unemployment in a monopoly controlled industry is inherently higher than an industry where competition exists.

Monopolies exhibit economic power which is in conflict with Friedman’s view of personal freedom.

Monopolies tend to exhibit no “social responsibility”.

_____7. Friedman’s view of the role of government in the education field is:

Education provides a common set of values that is needed in society.

A general knowledge and literacy are needed for a society to survive.

College subsidies and grants for students should not be taken away.

Vocational and professional training is seen as an investment in human capital.

None of the above are true.

_____8. If the velocity of money increases, but nominal GDP remains constant:

The money stock must be decreased.

The money stock must be increased.

The crude quantity theory of money is in evidence here.

P must have increased.

All of the above are true.

_____9. Monetarists believe that if the money supply is held to a stable growth rate, one comparable to the rate of growth of potential GDP, then:

Fine-tuning of the economy would not be necessary.

Real output would equal potential output.

Price stability would be realized.

The FOMC could be disbanded.

All of the above are true.

(5) The correct answer is option (D).

(6) The correct answer is option (D)

(7) The correct answer is option (E).

(8) The correct answer is option (A).

(9) The correct answer is option (A).

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