Question 1

To counter the recession of 2008-2009 President Obama and congress created a large increase in government expenditures.

Accepted Answer

A) True 
 B)False

Question 2

The laws that created the Fed give it some specific recommendations about what goals it should pursue so it has little discretion in making policy.

Accepted Answer

A) True 
 B)False

Question 3

During recessions, even with no changes in policy, the deficit tends to ______ because _____________.

Accepted Answer

rise, income falls so tax reve...

Question 4

Time inconsistency will cause the

Accepted Answer

A)   short-run Phillips curve to be higher than otherwise.
B)   short-run Phillips curve to be lower the otherwise.
C)   long-run Phillips curve to be farther to the right than otherwise.
D)   long-run Phillips curve to be farther left than otherwise.E) B) and C)
F) C) and D)

Question 5

Inflation reduction has the highest cost when the efforts are

Accepted Answer

A)   credible so that the sacrifice ratio is low.
B)   credible so that the sacrifice ratio is high.
C)   unexpected so that the sacrifice ratio is high.
D)   unexpected so that the sacrifice ratio is low.E) All of the above
F) None of the above

Question 6

Forward-looking parents can reverse the adverse effects of government debt by saving more and leaving a larger bequest to their children.

Accepted Answer

A) True 
 B)False

Question 7

When aggregate demand is too low to ensure full employment, those in favor of using monetary and fiscal policy to stabilize the economy might recommend

Accepted Answer

A)   cutting government spending.
B)   raising taxes.
C)   having the Fed purchase government bonds.
D)   reducing the money supply.E) A) and B)
F) B) and C)

Question 8

According to the political business cycle, after an election, unless the central bank acts inflation is likely to

Accepted Answer

A)   have risen. To counter this the central bank would raise interest rates.
B)   have risen. To counter this the central bank would lower interest rates.
C)   have fallen. To counter this the central bank would raise interest rates.
D)   have fallen. To counter this the central bank would lower interest rates.E) None of the above
F) A) and C)

Question 9

From the end of 2005 to the end of 2006, the United States ran a deficit of about $309 billion. The debt at the start of this period was about $4,592 billion. Which of the following combinations of inflation and real GDP growth would have allowed the government to run this deficit while keeping the ratio of real GDP to the debt about the same?

Accepted Answer

A)   about 3% inflation and about 2.2% real GDP growth
B)   about 3% inflation and about 3.2% real GDP growth
C)   about 3.4% inflation and about 3.3% real GDP growth
D)   about 3.4% inflation and about 4% real GDP growthE) B) and C)
F) None of the above

Question 10

The Obama administration believed that transfer payments to the unemployed would have a larger impact on aggregate demand than tax cuts.

Accepted Answer

A) True 
 B)False

Question 11

Stimulus spending in 2009 was used for

Accepted Answer

A)   building roads and bridges.
B)   providing aid to local and state governments.
C)   making payments to the unemployed.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 12

The Fed lowered interest rates in 2001 and 2002. This implies, other things the same, that the Fed

Accepted Answer

A)   increased the money supply because it was concerned about unemployment.
B)   increased the money supply because it was concerned about inflation.
C)   decreased the money supply because it was concerned about unemployment.
D)   decreased the money supply because it was concerned about inflation.E) A) and C)
F) B) and D)

Exam 36: Six Debates Over Macroeconomic Policy

According to the political business cycle, after an election, unless the central bank acts inflation is likely to

Correct Answer
verified

To counter the recession of 2008-2009 President Obama and congress created a large increase in government expenditures.

Correct Answer
verified

During recessions, even with no changes in policy, the deficit tends to because _______.

Correct Answer
verified
rise, income falls so tax reve...
View Answer

Time inconsistency will cause the

Correct Answer
verified

The Fed lowered interest rates in 2001 and 2002. This implies, other things the same, that the Fed

Correct Answer
verified

The Obama administration believed that transfer payments to the unemployed would have a larger impact on aggregate demand than tax cuts.

Correct Answer
verified

Stimulus spending in 2009 was used for

Correct Answer
verified

The laws that created the Fed give it some specific recommendations about what goals it should pursue so it has little discretion in making policy.

Correct Answer
verified

When aggregate demand is too low to ensure full employment, those in favor of using monetary and fiscal policy to stabilize the economy might recommend

Correct Answer
verified

Correct Answer
verified

Inflation reduction has the highest cost when the efforts are

Correct Answer
verified

Forward-looking parents can reverse the adverse effects of government debt by saving more and leaving a larger bequest to their children.

Correct Answer
verified

Exam 36: Six Debates Over Macroeconomic Policy

According to the political business cycle, after an election, unless the central bank acts inflation is likely to

Correct AnswerverifiedShow Answer

To counter the recession of 2008-2009 President Obama and congress created a large increase in government expenditures.

Correct AnswerverifiedShow Answer

During recessions, even with no changes in policy, the deficit tends to ______ because _____________.

Correct Answerverifiedrise, income falls so tax reve...View AnswerShow Answer

Time inconsistency will cause the

Correct AnswerverifiedShow Answer

The Fed lowered interest rates in 2001 and 2002. This implies, other things the same, that the Fed

Correct AnswerverifiedShow Answer

The Obama administration believed that transfer payments to the unemployed would have a larger impact on aggregate demand than tax cuts.

Correct AnswerverifiedShow Answer

Stimulus spending in 2009 was used for

Correct AnswerverifiedShow Answer

The laws that created the Fed give it some specific recommendations about what goals it should pursue so it has little discretion in making policy.

Correct AnswerverifiedShow Answer

When aggregate demand is too low to ensure full employment, those in favor of using monetary and fiscal policy to stabilize the economy might recommend

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Inflation reduction has the highest cost when the efforts are

Correct AnswerverifiedShow Answer

Forward-looking parents can reverse the adverse effects of government debt by saving more and leaving a larger bequest to their children.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

During recessions, even with no changes in policy, the deficit tends to because _______.

Correct Answer
verified
rise, income falls so tax reve...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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