Exam 36: Six Debates Over Macroeconomic Policy

Some countries have had high inflation for a long time. Others have had low or moderate inflation for a long time. Which of the following, at least in theory, could explain why some countries would continue to have high inflation?

A program to reduce inflation is likely to have higher costs if the sacrifice ratio is

Tax laws do not give preferential treatment to some kinds of retirement saving.

If financial turmoil overseas reduces U.S. net exports, then those in favor of "lean against the wind policies" would advocate

Advocates of cutting taxes rather than increasing government expenditures in response to a recession argue that the increase in spending by consumers and business may be more effective than that of the government. Explain this argument.

Which of the programs below would transfer wealth from the young to the old?

Which of the following could the government do to decrease the costs of inflation without lowering the inflation rate?

Explain how tax provisions to encourage private saving may reduce national saving.

Which of the following is not a typical justification for running a budget deficit?

Suppose a tax cut affects aggregate demand and aggregate supply. Which of the shifts raise real GDP?

Opponents of using policy to stabilize the economy generally believe that

Explain how tax cuts can increase aggregate supply.

Explain the main arguments in favor of economic stabilization.

Which of the following is true concerning IRA's, 401(k) and 403(b) plans?

Carefully explain how monetary policy can be used to counter a recession. Explain what the central bank does as well as how its actions affect the economy. Under what circumstances is fiscal policy especially useful?

In the early 1980's the Fed tightened monetary policy. Over the next few years

The time inconsistency of policy implies that

If inflation were high in some country and lawmakers in that country passed a law requiring the central bank to maintain a low level of inflation, it is likely that

Suppose tax laws were reformed to encourage saving by increasing the rate of return on savings. Which of the following would be true?

Accumulated over a long span of time, the tax rate on interest income