When Comparing the Keynesian and Monetarist Approaches, the Only Substantive

question 19

Multiple Choice

When comparing the Keynesian and monetarist approaches, the only substantive difference is that

• A)the Keynesian equation leads to a prediction of real GDP; the monetarist equation leads to a prediction of nominal GDP.
• B)Keynesians concentrate on aggregate demand and monetarists concentrate on aggregate supply.
• C)Keynesians approach aggregate demand by multiplying the money supply by velocity, while monetarists use the equilibrium conditions of the expenditure schedule.
• D)Keynesian analysis suggests that money affects consumption first while monetarist analysis suggests that money affects investment spending first.

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Definitions:

Highly Salient

Something that stands out conspicuously or is most noticeable in a particular context.

Primacy Effect

The inclination to recall information more effectively when it's introduced initially than when it comes later.

Upward Counterfactuals

Hypothetical scenarios that individuals imagine which are better than what actually happened, often used in reflecting on past events.

Downward Counterfactual

Thinking about how a situation could have been worse, often leading to feelings of relief or contentment.