The difference between the monetarist and Keynesian views on discretionary monetary policy is that the monetarists
a. believe monetary policy is a stabilizing force and Keynesians believe it is primarily destabilizing.
b. Keynesians think that monetary policy is always used effectively.
c. believe monetary policy is a destabilizing force and Keynesians believe it is potentially stabilizing.
d. favor "fine tuning" the economy by use of monetary policy while the Keynesians do not.
C
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An increase in the money supply: a. will definitely result in inflation if unemployment is high and there is much unused industrial capacity. b. shifts the aggregate demand curve to the left
c. will probably result in inflation if the economy is fully employed. d. causes interest rates to rise.
If the Fed changes the interest rate, there will be
a. a movement along the aggregate expenditure line followed by a shift in the line b. no movement along the aggregate expenditure line because the effect is on investment c. a shift in the aggregate supply curve d. an increase in the money supply e. a shift in the aggregate expenditure line