ECON 201 ch 13. Minnesota State University, Mankato
Multiple Choice: "There are two forces that cause the ...
1. Multiple Choice: "There are two forces that cause the ...
Points:1 Extra Credit Full Credit
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Question "There are two forces that cause the economy to grow. One is real, the other is an
illusion. The real force—entrepreneurial innovation and creativity—comes naturally as
long as government policies do not drive it away. The artificial force is easy money. An
increased supply of money, by creating an illusion of wealth, can increase spending in
the short run, but this eventually turns into inflation. Printing money cannot possibly
create wealth; if it could, counterfeiting would be legal." (Brian Wesbury, "Economic
Rehab," Wall Street Journal, June 7, 2006, p. A14) Does this quote illustrate the short-
run versus the long-run aspects of monetary policy? Why or why not?
Answer
Yes, in the short run output is increased, which creates wealth but over time leads to
inflation.
No, printing money does not lead to inflation in the long run; however money creation
must be regulated by the Fed.
Yes, in the long run, prices and wages become sticky making an easy money policy
counterproductive.
No, expansionary monetary policy has an effect of increasing price level and wealth
both in the short run and in the long run.
Correct Correct: Yes, the quote illustrates the short-run versus the long-run aspects of
Feedback monetary policy. In the short run, monetary expansion can increase output, income,
employment, and the price level and probably wealth as well. But over the long run,
increases in the money supple simply turn into higher prices.
Incorrect Incorrect: In the short run, monetary expansion can increase output, income,
Feedback employment, and the price level and probably wealth as well. But over the long run,
increases in the money supply simply turn into higher prices, the conclusion of
monetarists and the classical school.
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Multiple Choice: (Figure: Shifts in SRASand AD)Starti...
,ECON 201 ch 13. Minnesota State University, Mankato
2. Multiple Choice: (Figure: Shifts in SRASand AD)Starti...
Points:0 Extra Credit Full Credit
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Question (Figure: Shifts in SRASand AD)
Starting at equilibrium point d, if the cost of inputs rises, the short-run equilibrium will
move to point , and thus real output will and the price level will .
Answer a; decrease; stay the same
b; decrease; increase
c; stay the same; increase
There is not enough information to answer this question.
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True/ False: A conflict arises with the goals of m...
3. True/ False: A conflict arises with the goals of m...
Points:0 Extra Credit Full Credit
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Question A conflict arises with the goals of monetary policy if a demand shock occurs.
,ECON 201 ch 13. Minnesota State University, Mankato
Answer True
False
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Multiple Choice: A higher interest rate con...
4. Multiple Choice: A higher interest rate con...
Points:0 Extra Credit Full Credit
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Question A higher interest rate consumption, investment, and ,
which aggregate demand
Answer
decreases; exports; decreases
decreases; imports; decreases
increases; exports; increases
increases; imports; increases
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Multiple Choice: A lower interest rate increases consu...
5. Multiple Choice: A lower interest rate increases consu...
Points:0 Extra Credit Full Credit
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Question A lower interest rate increases consumption, investment, and , which
aggregate demand.
Answer imports; increases
imports; decreases
exports; increases
, ECON 201 ch 13. Minnesota State University, Mankato
exports; decreases
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Multiple Choice: A major war in the Middle East cuts o...
6. Multiple Choice: A major war in the Middle East cuts o...
Points:0 Extra Credit Full Credit
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Question A major war in the Middle East cuts off the supply of oil to the United States, causing a
recession and inflation. With the tools of monetary policy, the Federal Reserve:
Answer
can fight either the recession or the inflation.
can fight both the recession and the inflation.
can fight neither the recession nor the inflation.
should not try to fight either the recession or the inflation.
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True/ False: A monetary rule is especially appropr...
7. True/ False: A monetary rule is especially appropr...
Points:0 Extra Credit Full Credit
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Question A monetary rule is especially appropriate in the case of a major economic shock.
Answer True
False
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True/ False: A monetary rule would make it difficu...
8. True/ False: A monetary rule would make it difficu...
Multiple Choice: "There are two forces that cause the ...
1. Multiple Choice: "There are two forces that cause the ...
Points:1 Extra Credit Full Credit
Add Question
Success: 349 questions added as a copy.
Question "There are two forces that cause the economy to grow. One is real, the other is an
illusion. The real force—entrepreneurial innovation and creativity—comes naturally as
long as government policies do not drive it away. The artificial force is easy money. An
increased supply of money, by creating an illusion of wealth, can increase spending in
the short run, but this eventually turns into inflation. Printing money cannot possibly
create wealth; if it could, counterfeiting would be legal." (Brian Wesbury, "Economic
Rehab," Wall Street Journal, June 7, 2006, p. A14) Does this quote illustrate the short-
run versus the long-run aspects of monetary policy? Why or why not?
Answer
Yes, in the short run output is increased, which creates wealth but over time leads to
inflation.
No, printing money does not lead to inflation in the long run; however money creation
must be regulated by the Fed.
Yes, in the long run, prices and wages become sticky making an easy money policy
counterproductive.
No, expansionary monetary policy has an effect of increasing price level and wealth
both in the short run and in the long run.
Correct Correct: Yes, the quote illustrates the short-run versus the long-run aspects of
Feedback monetary policy. In the short run, monetary expansion can increase output, income,
employment, and the price level and probably wealth as well. But over the long run,
increases in the money supple simply turn into higher prices.
Incorrect Incorrect: In the short run, monetary expansion can increase output, income,
Feedback employment, and the price level and probably wealth as well. But over the long run,
increases in the money supply simply turn into higher prices, the conclusion of
monetarists and the classical school.
Add Question
Multiple Choice: (Figure: Shifts in SRASand AD)Starti...
,ECON 201 ch 13. Minnesota State University, Mankato
2. Multiple Choice: (Figure: Shifts in SRASand AD)Starti...
Points:0 Extra Credit Full Credit
Add Question
Question (Figure: Shifts in SRASand AD)
Starting at equilibrium point d, if the cost of inputs rises, the short-run equilibrium will
move to point , and thus real output will and the price level will .
Answer a; decrease; stay the same
b; decrease; increase
c; stay the same; increase
There is not enough information to answer this question.
Add Question
True/ False: A conflict arises with the goals of m...
3. True/ False: A conflict arises with the goals of m...
Points:0 Extra Credit Full Credit
Add Question
Question A conflict arises with the goals of monetary policy if a demand shock occurs.
,ECON 201 ch 13. Minnesota State University, Mankato
Answer True
False
Add Question
Multiple Choice: A higher interest rate con...
4. Multiple Choice: A higher interest rate con...
Points:0 Extra Credit Full Credit
Add Question
Question A higher interest rate consumption, investment, and ,
which aggregate demand
Answer
decreases; exports; decreases
decreases; imports; decreases
increases; exports; increases
increases; imports; increases
Add Question
Multiple Choice: A lower interest rate increases consu...
5. Multiple Choice: A lower interest rate increases consu...
Points:0 Extra Credit Full Credit
Add Question
Question A lower interest rate increases consumption, investment, and , which
aggregate demand.
Answer imports; increases
imports; decreases
exports; increases
, ECON 201 ch 13. Minnesota State University, Mankato
exports; decreases
Add Question
Multiple Choice: A major war in the Middle East cuts o...
6. Multiple Choice: A major war in the Middle East cuts o...
Points:0 Extra Credit Full Credit
Add Question
Question A major war in the Middle East cuts off the supply of oil to the United States, causing a
recession and inflation. With the tools of monetary policy, the Federal Reserve:
Answer
can fight either the recession or the inflation.
can fight both the recession and the inflation.
can fight neither the recession nor the inflation.
should not try to fight either the recession or the inflation.
Add Question
True/ False: A monetary rule is especially appropr...
7. True/ False: A monetary rule is especially appropr...
Points:0 Extra Credit Full Credit
Add Question
Question A monetary rule is especially appropriate in the case of a major economic shock.
Answer True
False
Add Question
True/ False: A monetary rule would make it difficu...
8. True/ False: A monetary rule would make it difficu...
