Fiscal and monetary policies smooth out the business cycle

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Reference no: EM13187338

Place "MOn," "RET" or "Main" beside the statements that most closely reflect monetarist rational expectations or mainstream views
a. Anticipated changes in aggregate demand effect only the price level; they have no effect on real output.
b. downward wage inflexability means that declines in aggregate demand can cause long lasting recession.
c. Changes in money supply M increase PQ; at first only, Q rises because norminal wages are fixed, but once workers adapt their expectations to ne wrealities, P rises and Q returns to its normal level.
d. Fiscal and monetary policies smooth out the business cycle.
e. The Fed should increase the money supply at a fixed annual rate.

Reference no: EM13187338

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