Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + Aplia, 1 term Printed Access Card
7th Edition
ISBN: 9781305134935
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 17, Problem 1QCMC
To determine
Nominal and real variables and money neutrality.
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The classical principle of monetary neutrality statesthat changes in the money supply do not influence_________ variables, and it is thought mostapplicable in the _________ run.a. nominal; shortb. nominal; longc. real; shortd. real; long
Money neutrality is the idea that
a. any policy can have intended and unintended consequences
b. in the long-run, markets will clear and return the economy to equilibrium regardless of what happens to the money supply.
c. there are two types of variables, nominal and real, and only nominal variables are affected by the money supply.
d. nominal and real interest rates are unrelated.
During the middle of the 20th century, income inequality in developed economies generally fell. The reason for this was
a. average incomes didn't rise but welfare systems redistributed income.
b. that returns to assets held by high income earners fell steadily.
c. incomes overall rose but taxation systems were slowly made more and more progressive.
d. a rise in average income with incomes of the bottom deciles rising faster than the top.
The short-run impact on the nominal interest rate of monetary expansion is different from its long-run impact. Which of the following explanations is not correct?a. In the short run, nominal interest rate falls due to Fisher effect.b. Over time, rising income pushes up nominal interest rate via increased demand for money.c. Over time, expected inflation rate rises, which in turn pushes up nominal interest rate.d. Over time, rising prices also push up nominal interest rate.e. All of the above are correct
Chapter 17 Solutions
Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + Aplia, 1 term Printed Access Card
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