Author Question: For the United States, what is money based on the transactions approach to measuring money? What ... (Read 85 times)

Cooldude101 · **on:** Jun 30, 2018

For the United States, what is money based on the transactions approach to measuring money?

What will be an ideal response?

Question 2

Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase 50 billion, while the second option is to cut taxes by 50 billion. A Keynesian economist would argue for

A) the spending option because it has a bigger impact on total spending. The spending directly raises total spending plus it works through the multiplier, while the tax cut only works through the multiplier.
B) the tax option because it is easier to pass. The effects on total spending would be identical.
C) the spending option because it won't affect the deficit the way the tax cut would.
D) the tax option because it also affects the incentives workers face. Long-run aggregate supply will increase with the tax cut, but not with the spending increase.

GCabra · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The transactions approach looks at what is used as a medium of exchange. For the
United States, this includes currency, transaction deposits, and traveler's checks.

Answer to Question 2

A