#1
Who is considered the pioneer of Monetarist Economics?
Milton Friedman
ExplanationMilton Friedman is considered the pioneer of Monetarist Economics.
#2
Which of the following is a key belief of monetarist economists?
The money supply should be tightly controlled to stabilize the economy.
ExplanationMonetarist economists believe the money supply should be tightly controlled to stabilize the economy.
#3
What is the central bank's role in monetarist economics?
To control the money supply
ExplanationThe central bank's role in monetarist economics is to control the money supply.
#4
Which of the following policies would a monetarist economist likely advocate during times of inflation?
Contractionary monetary policy
ExplanationDuring times of inflation, a monetarist economist would likely advocate for contractionary monetary policy.
#5
Which of the following is a criticism often leveled against monetarist policies?
They tend to exacerbate income inequality.
ExplanationA criticism often leveled against monetarist policies is that they tend to exacerbate income inequality.
#6
What is the monetarist perspective on the role of expectations in economic decision-making?
Expectations are central to understanding economic behavior.
ExplanationMonetarist economists believe that expectations are central to understanding economic behavior.
#7
According to monetarist theory, what is the primary determinant of aggregate demand?
The money supply
ExplanationThe primary determinant of aggregate demand according to monetarist theory is 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.
ExplanationThe Quantity Theory of Money states that the quantity of money available determines the price level and the growth rate of money determines the inflation rate.
#9
According to monetarist economists, what could cause long-term economic instability?
Unpredictable shifts in the money supply
ExplanationUnpredictable shifts in the money supply could cause long-term economic instability according to monetarist economists.
#10
What is the monetarist view on the Phillips Curve relationship between inflation and unemployment?
There is no trade-off between inflation and unemployment in the long run.
ExplanationThe monetarist view on the Phillips Curve relationship is that there is no trade-off between inflation and unemployment in the long run.
#11
According to monetarist theory, what would be the long-term effect of an expansionary monetary policy?
Stable economic growth
ExplanationAccording to monetarist theory, the long-term effect of an expansionary monetary policy would be stable economic growth.
#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.
ExplanationThe monetary transmission mechanism in monetarist economics is the process by which changes in the money supply affect interest rates and, subsequently, aggregate demand.
#13
In monetarist economics, what is the 'natural rate of unemployment'?
The unemployment rate that occurs when the economy is at full employment.
ExplanationThe natural rate of unemployment is the unemployment rate that occurs when the economy is at full employment in monetarist economics.
#14
What is 'monetary overhang' in monetarist theory?
A situation where the money supply grows faster than real GDP, leading to inflationary pressures.
ExplanationMonetary overhang is a situation in monetarist theory where the money supply grows faster than real GDP, leading to inflationary pressures.
#15
According to monetarist economists, what is the most appropriate policy response to a severe recession?
Conducting expansionary monetary policy
ExplanationAccording to monetarist economists, conducting expansionary monetary policy is the most appropriate policy response to a severe recession.
#16
In the context of monetarist economics, what is 'seigniorage'?
The difference between the face value of money and the cost of producing it
ExplanationIn the context of monetarist economics, seigniorage is the difference between the face value of money and the cost of producing it.
#17
According to monetarist theory, what would happen if the money supply grows faster than real output in the long run?
There would be inflationary pressure.
ExplanationAccording to monetarist theory, if the money supply grows faster than real output in the long run, there would be inflationary pressure.