Question 1

If the unemployment rate rises,which policies would be appropriate to reduce it?

Accepted Answer

A)  increase the money supply,increase taxes
B)  increase the money supply,cut taxes
C)  decrease the money supply,increase taxes
D)  decrease the money supply,cut taxesE) A) and C)
F) B) and C)

Question 2

Over time continued budget deficits lead to

Accepted Answer

A)  a higher capital stock and higher real wages.
B)  a higher capital stock and lower real wages.
C)  a lower capital stock and higher real wages.
D)  a lower capital stock and lower real wages.E) A) and C)
F) A) and B)

Question 3

Policymakers following a "lean against the wind" policy would

Accepted Answer

A)  increase government expenditures when output is low and decrease them when output is high.
B)  increase government expenditures when output is low and do nothing when output is high.
C)  decrease government expenditures when output is low and increase them when output is high.
D)  decrease government expenditures when output is high and do nothing when output is low.E) C) and D)
F) A) and D)

Question 4

Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5 percent per year.The debt created by these continuing deficits is

Accepted Answer

A)  sustainable,but the future burden on your children cannot be offset.
B)  sustainable,and the future burden on your children can be offset if you save for them.
C)  not sustainable,and the future burden on your children cannot be offset.
D)  not sustainable,but the future burden on your children can be offset if you save for them.E) C) and D)
F) A) and C)

Question 5

According to the political business cycle theory,if the central bank wanted to see an incumbent re-elected,prior to the election it might

Accepted Answer

A)  lower the discount rate and sell bonds.
B)  lower the discount rate and buy bonds.
C)  raise the discount rate and sell bonds.
D)  raise the discount rate and buy bonds.E) A) and B)
F) B) and C)

Question 6

Those who desire that policymakers stabilize the economy would advocate which of the following when aggregate demand is insufficient to ensure full employment?

Accepted Answer

A)  Decrease the money supply.
B)  Decrease taxes.
C)  Decrease government expenditures.
D)  Do nothing and let markets correct themselves.E) None of the above
F) C) and D)

Question 7

An increase in the money supply

Accepted Answer

A)  reduces interest rates and shifts aggregate demand to the right.
B)  reduces interest rates and shifts aggregate supply to the right
C)  raises interest rates and shifts aggregate demand to the right.
D)  raises interest rates and shifts aggregate supply to the right.E) All of the above
F) B) and C)

Question 8

If the central bank has discretion to make policy,it may create economic fluctuations that reflect the electoral calendar.This is called the political business cycle.

Accepted Answer

A) True 
 B)False

Question 9

The six debates over macroeconomic policy exist mostly because

Accepted Answer

A)  economists disagree over basic issues such as the importance of saving for economic growth.
B)  there are tradeoffs and people disagree about the best way to deal with them.
C)  politicians offer misleading information.
D)  people fail to clearly see the benefits or the costs of most changes.E) A) and D)
F) None of the above

Exam 37: Six Debates Over Macroeconomic Policy

Those who desire that policymakers stabilize the economy would advocate which of the following when aggregate demand is insufficient to ensure full employment?

Correct Answer
verified

Over time continued budget deficits lead to

Correct Answer
verified

An increase in the money supply

Correct Answer
verified

According to the political business cycle theory,if the central bank wanted to see an incumbent re-elected,prior to the election it might

Correct Answer
verified

Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5 percent per year.The debt created by these continuing deficits is

Correct Answer
verified

If the central bank has discretion to make policy,it may create economic fluctuations that reflect the electoral calendar.This is called the political business cycle.

Correct Answer
verified

Policymakers following a "lean against the wind" policy would

Correct Answer
verified

If the unemployment rate rises,which policies would be appropriate to reduce it?

Correct Answer
verified

The six debates over macroeconomic policy exist mostly because

Correct Answer
verified

Exam 37: Six Debates Over Macroeconomic Policy

Those who desire that policymakers stabilize the economy would advocate which of the following when aggregate demand is insufficient to ensure full employment?

Correct AnswerverifiedShow Answer

Over time continued budget deficits lead to

Correct AnswerverifiedShow Answer

An increase in the money supply

Correct AnswerverifiedShow Answer

According to the political business cycle theory,if the central bank wanted to see an incumbent re-elected,prior to the election it might

Correct AnswerverifiedShow Answer

Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5 percent per year.The debt created by these continuing deficits is

Correct AnswerverifiedShow Answer

If the central bank has discretion to make policy,it may create economic fluctuations that reflect the electoral calendar.This is called the political business cycle.

Correct AnswerverifiedShow Answer

Policymakers following a "lean against the wind" policy would

Correct AnswerverifiedShow Answer

If the unemployment rate rises,which policies would be appropriate to reduce it?

Correct AnswerverifiedShow Answer

The six debates over macroeconomic policy exist mostly because

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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