Mainstream Macroeconomics Has Embraced the

question 95

Multiple Choice

Mainstream macroeconomics has embraced the

• A) rational expectations view that stabilization policy is totally ineffective.
• B) monetarist view that the Fed should increase the money supply at a fixed annual rate.
• C) rational expectations view that expectations can shift the aggregate demand and aggregate supply curves.
• D) monetarist view that an increase in government spending crowds out an equal amount of investment spending.

Analyze improvements in energy efficiency through output relative to energy consumption.

Identify drivers of resource demand over time.

Trace the historical trends of world commodity prices.

Recognize primary sources of electricity generation in the U.S.

---

Definitions:

Nominal Interest Rates

The interest rate before adjustments for inflation, representing the face value of borrowing costs.

Real Interest Rates

The interest rate adjusted for the effects of inflation, reflecting the true cost of borrowing and the real yield to savers and investors.

Real Interest Rate

The nominal interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on investments.

Purchasing Power

The ability of an individual or group to buy goods or services with a given amount of money or currency.