#1
Who is considered the pioneer of Monetarist Economics?
John Maynard Keynes
Adam Smith
Milton Friedman
Friedrich Hayek
#2
Which of the following is a key belief of monetarist economists?
Fiscal policy is the most effective tool for controlling the economy.
The money supply should be tightly controlled to stabilize the economy.
Government intervention should be minimized in all economic matters.
Unemployment is primarily caused by structural factors.
#3
What is the central bank's role in monetarist economics?
To control government spending
To regulate interest rates
To control the money supply
To implement fiscal policy
#4
Which of the following policies would a monetarist economist likely advocate during times of inflation?
Expansionary monetary policy
Contractionary monetary policy
Expansionary fiscal policy
Increased government spending
#5
Which of the following is a criticism often leveled against monetarist policies?
They tend to exacerbate income inequality.
They are too reliant on government intervention.
They ignore the importance of fiscal policy.
They are ineffective in controlling inflation.
#6
What is the monetarist perspective on the role of expectations in economic decision-making?
Expectations play a negligible role in shaping economic outcomes.
Expectations are central to understanding economic behavior.
Expectations primarily influence short-term economic fluctuations.
Expectations are irrelevant in a market-driven economy.
#7
According to monetarist theory, what is the primary determinant of aggregate demand?
Government spending
Consumer spending
Investment spending
The money supply
#8
What is the 'Quantity Theory of Money' according to monetarist economists?
The theory that the quantity of money available determines the price level and that the growth rate of money determines the inflation rate.
The theory that money has no effect on the economy.
The theory that government intervention in the money supply is necessary for economic stability.
The theory that interest rates are the primary driver of economic growth.
#9
According to monetarist economists, what could cause long-term economic instability?
Fluctuations in consumer confidence
Excessive government regulation
Unpredictable shifts in the money supply
Inconsistent application of fiscal policy
#10
What is the monetarist view on the Phillips Curve relationship between inflation and unemployment?
There is a permanent trade-off between inflation and unemployment.
There is a short-term trade-off between inflation and unemployment.
There is no trade-off between inflation and unemployment in the long run.
There is a direct, linear relationship between inflation and unemployment.
#11
According to monetarist theory, what would be the long-term effect of an expansionary monetary policy?
Stable economic growth
Decreased inflation
Increased unemployment
Higher interest rates
#12
What is the 'monetary transmission mechanism' in monetarist economics?
The process by which changes in the money supply affect interest rates and, subsequently, aggregate demand.
The process by which the central bank communicates its monetary policy decisions to the public.
The process by which government spending influences consumer behavior and business investment.
The process by which inflation expectations influence wage negotiations and price-setting behavior.
#13
In monetarist economics, what is the 'natural rate of unemployment'?
The unemployment rate that occurs when the economy is at full employment.
The unemployment rate that occurs when there is no government intervention in the economy.
The unemployment rate that occurs when there is no frictional unemployment.
The unemployment rate that occurs when the government implements expansionary fiscal policy.
#14
What is 'monetary overhang' in monetarist theory?
A situation where the money supply grows faster than real GDP, leading to inflationary pressures.
A situation where interest rates are higher than the equilibrium level, causing decreased investment.
A situation where the central bank loses control over the money supply, leading to economic instability.
A situation where the government implements contractionary fiscal policy during an economic downturn.
#15
According to monetarist economists, what is the most appropriate policy response to a severe recession?
Increasing government spending
Reducing taxes
Conducting expansionary monetary policy
Implementing supply-side reforms
#16
In the context of monetarist economics, what is 'seigniorage'?
The difference between the face value of money and the cost of producing it
The revenue generated from the sale of government bonds
The interest income earned by commercial banks
The profit earned by the central bank from printing money
#17
According to monetarist theory, what would happen if the money supply grows faster than real output in the long run?
There would be no effect on the economy.
There would be deflationary pressure.
There would be inflationary pressure.
There would be no impact on price levels.