Monetarism suggests that A money should be backed by gold B the economy is

Monetarism suggests that a money should be backed by

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40. Monetarism suggests that: A) money should be backed by gold.B) the economy is unstable.C) monetary policy should be used to offset economic fluctuations.D) discretionary monetary policy does more harm than good. 41. Suppose that Canada and the eurozone are the only trading partners in the world. If interest rates are significantly lower in Canada than in the eurozone, then we would expect: 42. Assume that the marginal propensity to consume is 0.8 and potential output is $800 billion. If the actual real GDP is $850 billion, which of the following policies would bring the economy to potential output? Page 12
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43. Keynes believed that wages and prices were sticky. Therefore, a rightward shift of the aggregate demand curve would cause: Page 13
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Use the following to answer question 44.Figure: Shifts of the AD–ASCurves44. (Figure: Shifts of the AD–ASCurves) A decrease in wages in the short run is illustrated by: A) panel (a).B) panel (b).C) panel (c).D) panel (d). 45. An increase in government spending, all other things unchanged, will cause the aggregate demand curve to: Page 14
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46. Suppose Ronny decides to withdraw all of the cash out of his chequing account and open a single time deposit account at the same bank. As a result of this transaction: 47. A government would be able to pay off its debt if: 48. If the Bank of Canada were to increase the quantity of money in circulation, then: A) interest rates would decrease, investment would increase, and the aggregate demand curve would shift to the right.B) interest rates would increase, investment would increase, and the aggregate demand curve would shift to the right.C) interest rates would decrease, investment would increase, and the aggregate demand curve would shift to the left.D) interest rates would increase, investment would decrease, and the aggregate demand curve would shift to the left. Page 15
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