The monetarists emphasize the
a. importance of fiscal policy for determining GDP.
b. the instability of the money supply.
c. the stability of velocity.
d. need to "fine tune" the level of economic activity.
e. both b and c.
E
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Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and reserve-related (central bank) transactions become more negative (or less positive). b. The real risk-free interest rate rises and reserve-related (central bank) transactions become more negative (or less positive). c. The real risk-free interest rate falls and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate rises and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The experience of the Marcos Presidency in the Philippines in 1986 showed:
A. the importance of keeping the central bank independent from political pressure. B. transparency is critical if people are going to trust a central bank. C. published central bank balance sheets do not always reflect reality. D. all of the answers given are correct.