Under Alan Greenspan, the Fed:
A. Targeted interest rates only.
B. Targeted the money supply only.
C. Targeted the unemployment level.
D. Used a mix of money-supply and interest-rate adjustments.
D. Used a mix of money-supply and interest-rate adjustments.
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Over time, the wealth of society increases and payments technologies get more efficient. What is the effect on money demand of these two changes?
A) Money demand rises proportionately to the rise in wealth. B) Money demand rises, but less than proportionately to the rise in wealth. C) The overall effect is ambiguous. D) Money demand declines.
According to non-Keynesians, how will an increase in government spending financed by borrowing during a recession affect recovery?
a. Higher future taxes and interest rates will be required to finance the larger debt and this will weaken the recovery. b. Repayment of the debt can always be shifted to the future, making it possible to keep tax rates low and thereby strengthen the recovery. c. Higher interest payments will increase future government spending, and thereby promote a stronger the recovery. d. The increase in government spending will exert a multiplier effect on the economy, leading to a stronger recovery.