One of the strengths of monetary policy relative to fiscal policy is that monetary policy:

a. has a larger multiplier effect.

b. is subject to closer political scrutiny.

c. produces an offsetting net export effect.

d. can be implemented more quickly.

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Joshua StredderLv10

6 Apr 2021

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An expansionary monetary policy may be less effective than a restrictive monetary policy because:

a. the Federal Reserve Banks are always willing to make loans to commercial banks that are short of reserves.

b. fiscal policy always works at cross purposes with an expansionary monetary policy.

c. changes in exchange rates complicate an expansionary monetary policy more than they do a restrictive monetary policy.

d. commercial banks may not be able to find loan customers.

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What is the main difference between a demand shock stemming from monetary policy and a demand shock that comes from a change in spending?

A) In the short-run, an autonomous monetary policy easing lowers real interest rates and raises aggregate output whereas a positive spending shock has the opposite effect on both variables.

B) An autonomous monetary policy easing raises inflation permanently whereas a positive spending shock only raises inflation temporarily.

C) An autonomous monetary policy easing has a temporary effect on the real interest rate whereas a positive spending shock has a permanent effect on the real interest rate.

D) all of the above

E) none of the above

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46. Other things being equal, an increase in the supply of money

a. increases the price level.

b. reduces aggregate demand.

c. generate significant changes in relative prices.

d. reduces the amount of money balances.

47. As global financial markets become more intertwined, the Fed has

	a. more control over fiscal policy.
	b. less control over monetary policy.
	c. more control over monetary policy.
	d. less control over fiscal policy.

48. According to the quantity theory of money,

	a. the velocity of money is the least stable factor in the monetary analysis.
	b. a change in the money supply can lead only to a proportionate change in the price level.
	c. price level changes can best be explained by Keynesian analysis.
	d. the rate of inflation is not related to changes in the money supply.