Which of the Following Statements About the Monetarist View of the Macroeconomy

question 82

Multiple Choice

Which of the following statements about the monetarist view of the macroeconomy is incorrect?

• A)The money wage rate is sticky.
• B)Taxes should be kept low to avoid disincentive effects that decrease potential GDP.
• C)All recessions result from inappropriate monetary policy.
• D)Left alone, the economy rarely operates at full employment.
• E)Provided that the quantity of money is kept on a steady growth path, no active stabilization is needed to offset changes in aggregate demand.

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Definitions:

Useful Life

The estimated period over which a fixed asset is expected to be usable by the entity, affecting its depreciation calculation.

Straight-Line Method

An accounting method of depreciating fixed assets evenly over their useful lives.

Depreciation Expense

Depreciation expense is the systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Salvage Value

The estimated residual value of an asset at the end of its useful life, reflecting what it can be sold for or its scrap value.