Question

1. The Classical school of thought believed that velocity is unstable and unpredictable, making monetary policy weak and ineffective. True False

2. Milton Friedman was a: Keynesian economist. real business cycle economist. supply-side economist. monetarist economist. rational expectations economist.

3. The original Keynesian school dominated macro economic thinking: 1800s to 1933. 1997-2017. 1759-1793. 1933-1980.

Answer 1

Ans 1. The given statement is FALSE.

pVelocity of money is the rate at which money is moving from one transaction to another in the economy. Classical economists believed that velocity of money is constant while monetarists found velocity to be stable and predictable.

Ans 2. Milton Friedman was a MONETARIST ECONOMIST.

Milton Friedman was sn American economist whose work primarily revolved around monetarism. Friedman advocated that monetary policy should focus on the growth rate of money supply for maintaining price stability.

Ans 3.

The Keynesian school dominated macro economic thinking between 1933- 1980.

Keynes's economic model was developed during the Great Depression of the 30s. Government intervention is an important tool used in the Keynesian model for bringing economic stability. Increased government spending increases aggregate demand, leading to economic growth. The Keynesian school of thought dominated the economic world until early 70s, following the stagflation caused by the oil shock.