Suppose policy makers wish to increase steady state consumption per worker. Explain what must happen to the saving rate to achieve this objective
What will be an ideal response?
it depends! Whether the saving rate must increase, decrease, or remain constant depends on what the current saving rate is compared to the golden rule saving rate. If s < sg, the saving rate must increase to increase steady state consumption. If s > sg, the opposite must occur.
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Which of the following is NOT generally recognized as a channel for monetary policy?
A) interest rate channel B) balance sheet channel C) financial market channel D) bank lending channel
The Monetarist transmission mechanism through which monetary policy affects the price level, real GDP, and employment depends on the:
a. indirect impact of changes on the interest rate. b. indirect impact of changes on profit expectations. c. direct impact of changes in fiscal policy on aggregate demand. d. direct impact of changes in the money supply on aggregate demand.