Monetary Policy and Macroeconomics
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Questions and Answers

What is the primary objective of monetary policy?

  • Maintaining price stability (correct)
  • Managing exchange rates
  • Controlling monetary aggregates
  • Stimulating economic activity

    • According to Keynes, what is the relationship between the precautionary motive and?

  • Consumption habits
  • Wealth accumulation
  • Interest rates (correct)
  • Income levels

    • What is the primary factor influencing the demand for money according to Friedman?

  • Economic preferences (correct)
  • Interest rates
  • Wealth distribution
  • Current income

    • What is the implication of the classical model being dichotomous?

    <p>Monetary policy affects the general price level</p> Signup and view all the answers

    What is the consequence of a decrease in the money supply according to the quantitative theory of money?

    <p>A decrease in the general price level</p> Signup and view all the answers

    What is the trade-off implied by the quantitative theory of money?

    <p>Between inflation and unemployment rates</p> Signup and view all the answers

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