In the 1960s, despite the successful application of expansionary fiscal policy in the United States, Milton Friedman argued that
A) Keynesian supply-side policies were more effective at stimulating aggregate demand than expansionary fiscal policies.
B) aggregate demand is affected by money and not by fiscal policy, and therefore only monetary policy should not be used to move the economy back to its potential output.
C) aggregate demand is affected by money and not by fiscal policy, which is why policymakers should institute a policy of steady money growth and allow the economy to reach full employment through a process of self-correction.
D) fiscal policy must be combined with monetary policy to move the economy back to its potential output, without increasing inflationary pressure.
Correct Answer:
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Q2: John Maynard Keynes argued that _
A) flexibility
Q3: Which of the following is true about
Q4: According to early classical macroeconomics, unemployment
A) can
Q5: An important distinction between the classical and
Q6: During the Great Depression, investment plummeted because
A)
Q7: Early classical macroeconomics was based largely on
Q8: Which component of aggregate demand plunged sharply
Q9: A fundamental feature of early classical macroeconomics
Q10: Which of the following factors contributed to
Q11: Classical economists believed
I. there could be temporary
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