Question

URGENT! 31-36

Each Question has 4-6 parts, please answer all of them.

-Which of the following believes that “an increase in OUTPUT causes the Money Supply to increase”?

Supply-Side economics

New Classical economics

Monetarism

Real Business Cycle Theory

New Keynesian economics

-There would be no basis for trade if

Country A can produce more of both goods than Country Z.

Country D has the same opportunity costs in production than Country W.

Country B is much less efficient in the production of a good than Country Y.

Country C has higher labor costs than Country X.

Which of the following suggests that “Money does not matter”?

Monetarism

Supply-Side economics

Keynesian economics

New Classical economics

Marxism

-Which of the following is TRUE? The real interest rate (r) …

is greater than the nominal interest rate (i) if expected inflation is negative.

is always greater than the nominal interest rate (i).

is unaffected by expected inflation.

is always less than the nominal interest rate (i).

-According to Milton Friedman, the demand for real money balances is approximately a function of …

disposable income.

the nominal interest rate.

permanent income.

transitory income.

the real interest rate.

--Which of the following restricted branch banking across state lines?

McFadden Act

Glass-Steagall Act

Bretton-Woods Agreement

Legal Tender Act

Federal Reserve Act

Answer 1

1. An increase in output causes the money supply to increase is defined in Quantity theory of money (QTM)

Ans. Monetarism

2. There would be no basis of trade if Country D has same opportunity cost in production then Country W

3. The real interest rate is greater than the nominal interest rate if the inflation rate is lower then zero. So it means expected inflation is negetive.

4. According to Milton Friedman, the demand for real money balances is approximately a function of permanent income (Yp).

5. The McFadden Act of 1927, strictly forbade banks being owned and operated across state lines.