61. A rapid, global, private sector shift to thrift is exactly what the world economy does not need, but it ought to be good news in the long term. The logic here is that higher thrift

decreases current aggregate demand, but by financing investment increases long term growth

finances current deficit spending, but reduces the deficit in the long run

means higher taxes which decreases current aggregate demand, but finances long term government spending

decreases aggregate demand, but stimulates the economy through supply-side effects

1. "Transactions" money is money used as a

a) store of value b) unit of account

c) medium of exchange d) standard of deferred payment

2. What is the significance of underestimating transactions money?

a) monetary policy will be overstimulating the economy

b) monetary policy will be putting a drag on the economy

c) there is a need for money that the central bank should be meeting

d) the economy has too much money and therefore not enough spending 45