Unformatted text preview: s a positive relationship - more money higher prices - graph B is a positive relationship
4. the government budget deficit (x) and interest rates (y) if you believe in the Classical model?
a. A b. B c. C d. D e. E this is the first question in a different form - when the budget deficit increases the I curve shifts out ( greater borrowing)
and this drives up interest rates = a positive relationship - graph B
5. David Ricardo once wrote, "neither a state nor a bank ever has had unrestricted power of issuing paper money,
without abusing that power; in all States, therefore, the issue of paper money ought to be under some check and control;
and none seems so proper as that of subjecting the issuers of paper money to the obligation of paying their notes, either
in gold coin or bullion." If you believed this, you would most likely be a supporter of: a. the multiplier b. the gold standard c. the accelerator d. the Phillips curve the gold standard since it took control of the money supply away from governments 6. If the US were on the gold standard in 1985, then which of the following would be true?
a. the US...
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