A decrease in savings deposits would ____ M1 and ____ M2.
a. increase; increase.
b. not change; increase.
c. decrease; decrease.
d. not change; decrease.
Question 2
The dramatic reduction of the money supply during the 1930s was responsible for the Great Depression. The macroeconomy is intrinsically stable if left alone by the prying hand of government. The Federal Reserve Board, instead of tightening money during booms and loosening money during recessions (policies that are ineffective due to time lags), should simply increase the supply of money at a steady rate of 3 to 5 percent per year.. This statement reflects which school of thought?
a. The traditional Keynesians
b. The monetarists
c. The traditional classicals
d. The new Keynesians
e. The new classicals
Two modes of evolutionary change.
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