SOLVED

21) Empirical studies on velocity and money demand have limited usefulness for monetary policy because they often ignore A) money supply effects. B) interest rate effects. C) inflation effects. D) lags in monetary policy. 22) The problem of getting an accurate reading on current economic developments is known as the A) data problem. B) recognition lag. C) impact lag. D) information problem. 23) The impact lag is the time between A) a change in the money supply and a change in interest rates. B) a change in the money supply and a change in GDP. C) the use of a Federal Reserve tool and its effect on GDP. D) the use of a Federal Reserve tool and its effect on the money supply. 24) The __________ lag refers to the problem of getting an accurate fix on what is happening in the economy. A) recognition B) realization C) impact D) None of the above. 25) All of the following explain the impact lag except the time between A) a change in the money supply and a change in interest rates. B) a change in interest rates and a change in investment. C) a change in investment and the change in GDP. D) a change in the economy and the use of a tool of monetary policy. 26) The Federal Reserve appears to tighten monetary policy after a trough __________ it eases policy after a peak in the business cycle. A) sooner than B) after about the same length of time as C) later than D) no sooner or later than 27) Federal Reserve policy appears to be A) more concerned with avoiding recession rather than preventing inflation. B) more concerned with preventing inflation rather than avoiding recession. C) equally concerned with avoiding recession and preventing inflation. D) motivated by whether inflation or recession is the current problem. 28) The Federal Reserve often begins to tighten monetary policy after a trough in the business cycle because of A) the impact lag. B) the recognition lag. C) bureaucratic indecision. D) the time necessary to get Congress to act. 29) Economic models using computer simulations can provide an estimate of the A) recognition lag. B) decision lag. C) bureaucratic lag. D) impact lag. 30) A Monetarist-oriented econometric model is likely to emphasize that monetary policy affects economic activity A) directly through changes in government spending. B) directly through changes in the money supply. C) indirectly through changes in velocity. D) indirectly through changes in money demand. 31) A Keynesian econometric model is likely to emphasize that monetary policy affects economic activity through changes in A) the money supply. B) reserve requirements. C) interest rates. D) currency holding by the public. 32) When detailing the impact of monetary policy, a Keynesian econometric model is likely to emphasize the link between A) interest rates and investment. B) the money supply and inflation. C) velocity and economic growth. D) aggregate supply and the money supply. 33) Keynesian models involve considerable efforts to explain the determinants of A) the money supply. B) aggregate supply. C) liquidity preference. D) the demand deposit multiplier.