QUESTION $11$

Suppose the money supply increases by $4\%,$ velocity increases by $4\%,$ and real output decreases by $3\%.$ What is the rate of inflation or deflation?

A$.7\%$ inflation

B$.3\%$ deflation

C$.3\%$ inflation.

D$.11\%$ inflation.

E$.5\%$ deflation.

QUESTION $12$

What occurred during neoclassical synthesis?

A$.$ Keynesians agreed with Arthur Laffer that tax cuts sometimes increase government revenues.

B$.$ The Keynesians agreed with Irving Fisher that government causes the business cycle in the long run.

C$.$ The Keynesians agreed with Robert Lucas that rational expectations exist in the short run.

D$.$ The Keynesians agreed with Milton Friedman that increased aggregate demand policies influence the nominal GNP economy in a short run recession but reals

in the long run after full employment is reached.

E$.$ None of the above occurred.

QUESTION $13$

The new classical macro school would agree with which of the following?

A$.$ A horizontal aggregate supply curve.

B$.$ The economy is always in the short run.

C$.$ Systematic government policy has negative effects on the economy.

D$.$ Rarely are markets clearing fully.

E$.$ Workers and investors form rational expectations.

Click Save and Submit to save and submit. Click Save All Answers to save all answers.