Monetarists believe:
a. the cause-and-effect relationship hypothesized by the Keynesians understates the impact of stimulative monetary policy.
b. the cause-and-effect relationship hypothesized by the Keynesians is an accurate description of how monetary policy works.
c. since the economy is operating at full employment, any stimulative monetary policy will cause the inflation rate to rise.
d. the cause-and-effect relationship hypothesized by the Keynesians is backwards, and decreases in the money supply actually stimulate economic activity.
e. the cause-and-effect relationship hypothesized by Keynesians will not work because investment does not respond to changes in interest rates.
Question 2
When full employment is present in the United States:
a. the rate of unemployment will fall to zero.
b. the actual rate of unemployment will be less than the natural rate of unemployment.
c. approximately 95 percent of the adult population will be employed.
d. approximately 95 percent of the labor force will be employed.
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