1. Answer True or False for each of the following.
Rational Expectations believes that markets accurately incorporate all known info
According to the Monetarists wages and prices are completely flexible.
The Monetarists believe that the velocity of money is a constant.
The Monetarists believe that fiscal policy results in a high level of crowding out.
Supply side economists believe that the government skews the incentive system.
The R-E economists believe that money affects real economic variables.
The Monetarists admit that wages and prices are sticky in the short run.
According to supply-siders tax cuts should go to households.
According to Milton Friedman, the Fed should increase the money supply at a constant rate each year.
According to the original supply-siders, raising taxes can raise tax revenue some of the time.
2. The money supply is currently growing at 8% per year. According to the monetarists what will happen to the price level? What should the money supply be doing?
1. Answer True or False for each of the following.
Rational Expectations believes that markets accurately incorporate all known info
According to the Monetarists wages and prices are completely flexible.
The Monetarists believe that the velocity of money is a constant.
The Monetarists believe that fiscal policy results in a high level of crowding out.
Supply side economists believe that the government skews the incentive system.
The R-E economists believe that money affects real economic variables.
The Monetarists admit that wages and prices are sticky in the short run.
According to supply-siders tax cuts should go to households.
According to Milton Friedman, the Fed should increase the money supply at a constant rate each year.
According to the original supply-siders, raising taxes can raise tax revenue some of the time.
2. The money supply is currently growing at 8% per year. According to the monetarists what will happen to the price level? What should the money supply be doing?
