Keynesian vs Monetarist

2 questions on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

Industrial production moves up and down in step with the business cycle itself, in real time. What kind of indicator is that?

A. A coincident indicator B. A leading indicator C. A lagging indicator D. A cyclical stock

How sure are you?

Sure Fairly sure Guessing

Correct: A. Moving with the cycle in real time is the definition of a coincident indicator.

B. A leading indicator moves before the turn, not with it.

C. A lagging indicator only confirms a turn after it happens.

D. A cyclical stock is a stock category, not an economic indicator.

Unit: SIE outline 1.3.2

Question 2Harder

An economist argues that in a downturn, the government should increase spending and cut taxes to replace lost private demand. Whose view is this?

A. Keynesian B. Monetarist C. Both views equally D. Neither; this describes the Federal Reserve's own policy

How sure are you?

Sure Fairly sure Guessing

Correct: A. The Keynesian view says total demand drives output, and that government should replace collapsed private demand through spending or tax cuts, fiscal policy.

B. The Monetarist view favors steady control of money growth, not fiscal spending or tax cuts.

C. The two schools prescribe different levers on purpose; this description fits only one of them.

D. Spending and tax policy are fiscal tools, Congress and the Treasury's domain, not the Federal Reserve's.

Unit: SIE outline 1.3.2

Now answer