The monetarists complained that early Keynesian structural models tended to ignore the impact of monetary policy changes on
A) interest rates.
B) investment spending.
C) consumption spending.
D) capital goods spending.
12) Monetarists contend that the channels of monetary influence in Keynesian structural models are too ________ defined, ________ the importance of monetary policy.
A) broadly; exaggerating
B) broadly; understating
C) narrowly; understating
D) narrowly; exaggerating
13) Monetarists claim that ________ models ignore important transmission mechanisms and therefore ________ the importance of the effects of monetary policy on the economy.
A) structural; overstate
B) reduced-form; overstate
C) reduced-form; understate
D) structural; understate
14) Monetarists assert that monetary policy may affect aggregate demand through
A) only an interest rate channel.
B) only an exchange rate channel.
C) only two channels: interest rates and exchange rates.
D) many channels.
15) If the particular channels through which changes in the money supply affect aggregate income are diverse and continually changing, the best evidence of monetary policy's effect is likely to come from
A) reduced-form models.
B) structural models.
C) median-voter models.
D) indirect models.
16) Monetarists' preference for reduced-form models is based on their belief that
A) reverse causation is a problem.
B) structural models may understate money's effect on economic activity.
C) money supply changes are always endogenous.
D) monetary policy affects only investment spending.
17) When Keynesians argue that "correlation does not necessarily imply causation," they are probably criticizing
A) structural-model evidence.
B) reduced-form evidence.
C) indirect-model evidence.
D) black-box evidence.
18) Reverse causation between money and aggregate output is likely to be a problem when a central bank targets
A) a monetary aggregate.
B) an interest rate.
C) the exchange rate.
D) the inflation rate.
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