What are the defining features of monetarist macroeconomics and what policies do monetarist macroeconomists recommend?
What will be an ideal response?
Monetarists believe that the economy is self-regulating and will typically operate at full employment if monetary policy is not erratic and the money growth rate is kept steady. The major source of business cycle fluctuations are similar to the Keynesian view, that is, changes in aggregate demand combined with a sticky money wage rate. However, according to monetarists, the changes in aggregate demand are the result of fluctuations in the growth rate of money caused by the Federal Reserve. Monetarists assert that the proper government policies are low taxes, to avoid the disincentive effects stressed by classical macroeconomists, and steady monetary growth.
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Required reserves:
A. Must be held at the regional Fed bank. B. Represent the dollars that a bank can lend. C. Are the minimum amount of reserves a bank is required to hold. D. Are equal to total reserves minus expected reserves.
An example of a short-run fixed factor of production is
A) capital equipment. B) labor. C) electricity. D) postage for mailing.