State whether you agree or disagree or partially agree with the following statem

Question

State whether you agree or disagree or partially agree with the following statements and justify your answers.

a) “Monetarist and Classical views are the same on the short-run effects of expansionary monetary policy.”
b) “According to Keynes, people only hold money to use in transactions”
c) “Governments or policymakers face both short-run and long-run trade-off between unemployment and inflation in macroeconomic policymaking”
d) “Phillips curve was originally set in terms of the rate of change of real wages.”

Explanation / Answer

The first statement is incorrect. Monetarist are convinced that in the short run the expansionary monetary policy can increase the real GDP while classical views are different and they believe that expansionary monetary policy in the short run with only create inflation.

The second statement is incorrect because keynesian demand for money composed of transaction demand is speculative demand and precautionary demand.

The third statement is also incorrect because policymakers do not face any long run trade off between unemployment and inflation. In the long run economy always rates at its natural rate of unemployment in so in the long run only inflation can increase but not unemployment

The last statement is also incorrect because Phillips curve was designed for observing the changes in nominal wages and the unemployment

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.