Which of the Following Is True About Keynesians and Monetarists

question 99

Multiple Choice

Which of the following is true about Keynesians and Monetarists with regards to policy intervention?

• A)Keynesians favor the use of fiscal policy to bring the economy back to its potential output while Monetarists favor the use of monetary policy to bring the economy back to its potential output.
• B)Keynesians favor active policy intervention to bring the economy back to its potential output while Monetarists argue that the uncertain nature of lags render policy intervention
• Destabilizing.
• C)Keynesians argue that with its shorter and more predictable policy lags, fiscal policy is more effective that monetary policy in bringing the economy back to its potential output, while
• Monetarists argue that monetary policy lags are much shorter and more predictable than fiscal policy lags and therefore more effective in bringing the economy back to its potential
• Output.
• D)While both schools favor the use of intervention policies, Keynesians argue that such policies are more effective at eliminating recessionary gaps while Monetarists contend that they are
• More effective at eliminating inflationary gaps.

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Definitions:

Cross Price Elasticity

An indicator of the sensitivity of the demand for one product in relation to the price variations of a different product.

Mobile Service

Mobile service refers to the provision of telecommunication services such as voice and data communication over a network by a provider to a mobile device.

Landline Service

A form of telecommunication service that is delivered through a wired connection, typically using copper wires or fiber-optic cables.

Price Elasticity

A measure of how much the demand or supply of a product changes in response to a change in its price.