What Is the Main Difference Between New Keynesian Economists and Monetarists

question 54

Multiple Choice

What is the main difference between new Keynesian economists and monetarists?

• A) Monetarists support a fixed-price model, whereas new Keynesians believe that prices fluctuate.
• B) Monetarists reject the idea that government intervention can stabilize the economy, whereas new Keynesians support this notion.
• C) Monetarists believe that the aggregate supply curve is always horizontal, whereas new Keynesians believe that the aggregate supply curve is always vertical.
• D) Monetarists believe that an increase in the money supply changes real GDP instantaneously, whereas new Keynesians assume that economic policy operates with
• A long and variable lag.
• E) Monetarists believe that deficit spending helps stimulate economic growth, whereas new Keynesians advocate a balanced budget.

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Definitions:

Unearned Interest: Leases

Interest that has been collected on a lease but not yet earned, often because the period it covers has not fully elapsed.

Present Value Factors

Numeric factors used in calculating the present value of future cash flows, reflecting the time value of money.

Interest Revenue

Income earned from investments in interest-bearing assets like bonds, loans, and savings accounts.

Bargain Purchase Option

An option in a lease agreement that allows the lessee to purchase the leased asset at the end of the lease term for a price significantly lower than the expected fair market value.