Question

Question 31 pts

According to the monetarists

the supply of money changes in response to changes in the levels of real output and prices.

changes in the velocity of money drive the level of economic activity.

expansionary fiscal policy will lower interest rates and thereby stimulate investment and consumption.

changes in the money supply are the primary cause of changes in the price level.

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Question 41 pts

New classical economists believe that

government regulation of businesses is needed to help control inflation.

governmental intervention is necessary to stabilize the economy.

antitrust laws should be toughened in order to restrain inflation.

people and markets are rational, anticipating the effect of all known economic factors.

Answer 1

31. D.) Changes in the money supply are the primary cause of changes in the price level.

Changes in the money supply can affect both the price level and real output.

Monetarism is an economic theory that focuses on the macroeconomic effects of the supply of money and central banking. Formulated by Milton Friedman, it argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability.

41. D.) People and madkema are rational,anticipati an the effect of all known economic factors.

Classical economists believe that there is nothing the government can do to help the economy that is better than the market's solutions.Economic fluctuations are to be expected and that they are the natural by-product of people freely making decisions.It believes in laissez-faire economic market