Recent research by Keynesians and classicals has led to
A) a reconciliation of the types of models they use.
B) the recognition by classical economists that prices adjust very slowly.
C) convincing evidence that TFP shocks are the dominant force affecting the business cycle.
D) the refutation of the efficiency wage model.
A
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According to this Application, during the late 1980s, Argentina pegged its currency to the U.S. dollar. After 1995, the U.S. dollar appreciated sharply on world markets. Since the Argentinean peso was pegged to the U.S
dollar, the appreciation of the dollar essentially caused A) the peso to appreciate relative to the dollar, but depreciate on world markets. B) a sharp devaluation of the dollar relative to the peso. C) a severe revaluation of the peso relative to the dollar. D) the peso to also appreciate sharply on world markets.
If the money multiplier is 10, the purchase of $1 billion of securities by the Fed on the open market causes a
A) $10 billion decrease in the money supply. B) $1 billion decrease in the money supply. C) $1 billion increase in the money supply. D) $10 billion increase in the money supply.