Question: According to the model of aggregate supply and aggregate demand, inflation (that is, increases in the price level) are often driven by

a) Increases in aggregate demand

b)Increases in aggregate supply

c) Decreases in the money supply

d) Increases in interest rates

Question: According to the growth theory of Paul Romer as presented in this course, long-run economic growth is the result of

a) Many people generating many new ideas

b) Lower population growth

c) Intellectual property rights

d) Malthusian economics

Question: Thomas Malthus incorrectly predicted that

a) Population growth would continue to erase any temporary gains in per capita real GDP

b) Significant growth in the money supply would result in high inflation

c) Per capita real GDP had reached its peak because no further gains in agricultural productivity were possible

d) Scarcity would cease to be an economic problem within 100 years

Question: The "Friedman rule" states that the optimal rate of inflation

a) is actually negative (deflation)

b) cannot be known due to confusion about relative prices

c) depends on the level of asset prices

d) is 2% per year

Question: Monetarism's impact on monetary policy is evidenced through the commonly employed central bank tactic of

a) Quantitative easing

b) The Friedman rule

c) Currency devaluation

d) Discount window lending

One feature that distinguishes Real Business Cycle theory from many other theories of the business cycle is that the role of ________ is not considered important.

a) Money

b) Rational expectations

c) Consumers

D) Utility Maximization