A Monetarists Would Expect an Increase in Government Spending to Have

question 6

Multiple Choice

A monetarists would expect an increase in government spending to have a strong effect on output only if the spending increase was

• A)financed by an increase in the money supply.
• B)financed by a sale of bonds.
• C)financed by an increase in taxes.
• D)accompanied by a higher in the deficit.

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Definitions:

Principle

A basic principle or statement that acts as the cornerstone for a belief system or behavior, or as the starting point for a sequence of logical arguments.

Hypothesis

A proposed explanation for a phenomenon, based on limited evidence as a starting point for further investigation.

Prototype

An original model or preliminary version from which other forms are developed or copied.

Normative

Relating to principles or rules of what is considered right and wrong, often used in economics to express subjective or value-based judgments.