the economics of money, banking, and financial markets

805 "

© 2014 Pearson Canada Inc."

17. 
    

    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
    Answer: A
    Diff: 2 Type: MC Page Ref: 640
    Skill: Recall
    Objective List: 25.1 Express the different types of empirical evidence

    
    


18. 
    

    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
    Answer: B
    Diff: 2 Type: MC Page Ref: 640
    Skill: Recall
    Objective List: 25.1 Express the different types of empirical evidence

    
    


19. 
    

    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
    Answer: B
    Diff: 2 Type: MC Page Ref: 640
    Skill: Recall
    Objective List: 25.1 Express the different types of empirical evidence

    
    


20. 
    

    A basic principle in economics is that correlation ____ imply ____.
    A) does not necessarily; causation
    B) does; causation
    C) does not necessarily; independence
    D) Both A and C
    Answer: D
    Diff: 3 Type: MC Page Ref: 641
    Skill: Recall
    Objective List: 25.1 Express the different types of empirical evidence