chapter 15

the mainstream view is that macro-economic instability is mainly caused by

changes in investment

the monetarist views macro-economic instability as a result of

monetary policy

keynesians don’t buy into the idea that the nation would return to previous fully employment levels of output on its own without

government intervention

give the equation of exchange

pv=mq

if the supply of money is $5 trillion and the GDP of a country is $8.6 trillion, what is the income velocity

1.72

to monetarists, income velocity should be stable but stable does not mean it should be

unmoveable

the real business cycle view breaks the traditional view that — is fixed and unmovable

LRAS

rational expextations theory argues that — occurs and occurs quickly in reaction to changes in the macro-economy

selfcorrection

efficiency wage theory may upset business owners because it states that greater output may come if they pay workers — market rate

more than

the monetary rule idea would make monetary policy decisions

predetermined

although monetarists are not necessarily in favor of a balanced budget, they are, for the most part opposed to — fiscal policy

discretionary

those monetarists who favor using monetary rules also favor inflation

targeting