Question 1

In the 1970s, the Australian government decided to charge fees for university education.

Accepted Answer

A) True 
 B)False

Question 2

Discretion in the conduct of monetary policy does not limit incompetence and abuse of power.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A) as long as the government debt grows faster than the economy's income, government deficits can grow forever 
B) as long as the government debt grows more slowly than the economy's income, government deficits can grow forever 
C) as long as the government debt grows more slowly than the economy's income, government deficits cannot grow forever 
D) none of the above 
A) as long as the government debt grows faster than the economy's income, government deficits can grow forever 
B) as long as the government debt grows more slowly than the economy's income, government deficits can grow forever 
C) as long as the government debt grows more slowly than the economy's income, government deficits cannot grow forever 
D) none of the above

Question 4

Economies can be left to find their own solution.

Accepted Answer

A) True 
 B)False

Question 5

Reducing inflation is a policy with temporary costs and permanent benefits.

Accepted Answer

A) True 
 B)False

Question 6

If the government's plan is credible, then:

Accepted Answer

A) the short-run Phillips curve will not shift 
B) people will not adjust their expectations of inflation 
C) the cost of disinflation will be high 
D) the cost of reducing inflation will be low 
A) the short-run Phillips curve will not shift 
B) people will not adjust their expectations of inflation 
C) the cost of disinflation will be high 
D) the cost of reducing inflation will be low

Question 7

What are the costs of inflation for society?

Accepted Answer

a.Shoe leather costs
b.Menu co

Question 8

Your economics professor has probably told you that there will be a final exam in your economics class.The main reason for this final exam is to make sure that everyone has an incentive to work hard, come to class and read the textbook.When the day of the examination comes, however, it seems as if everyone would be better off if the professor cancelled the exam.You wouldn't have to take the exam, and your professor wouldn't have to mark it.Do you think your economics professor is likely to cancel the exam? Why not? What economic idea does this illustrate?

Accepted Answer

The professor is unlikely to cancel the

Question 9

Which of the following is not the cost of reducing inflation to zero?

Accepted Answer

A) preventing arbitrary redistributions of wealth associated with dollar-denominated debts 
B) reducing the variability of relative prices 
C) eliminating the confusion and inconvenience resulting from a changing unit of account 
D) the high unemployment and low output needed to reduce inflation 
A) preventing arbitrary redistributions of wealth associated with dollar-denominated debts 
B) reducing the variability of relative prices 
C) eliminating the confusion and inconvenience resulting from a changing unit of account 
D) the high unemployment and low output needed to reduce inflation

Question 10

Proponents of the balanced government budget argue that:

Accepted Answer

A) future generations will be burdened by the government's debt 
B) living standards of future generations will decrease by the government debt 
C) budget deficits cause crowding out 
D) all of the above are correct 
A) future generations will be burdened by the government's debt 
B) living standards of future generations will decrease by the government debt 
C) budget deficits cause crowding out 
D) all of the above are correct

Question 11

Which of the following is the benefit of reducing inflation to zero?

Accepted Answer

A) eliminating shoe leather costs 
B) eliminating menu costs 
C) eliminating the confusion and inconvenience resulting from a changing unit of account 
D) all of the above 
A) eliminating shoe leather costs 
B) eliminating menu costs 
C) eliminating the confusion and inconvenience resulting from a changing unit of account 
D) all of the above

Question 12

Citing an example, explain why the Reserve Bank of Australia (and its Governor) is independent of the government.

Accepted Answer

In arter to evert the problem of polital

Question 13

Which of the following is not part of the cost of inflation?

Accepted Answer

A) shoeleather costs 
B) menu costs 
C) distortions of the tax system 
D) stronger domestic currency 
A) shoeleather costs 
B) menu costs 
C) distortions of the tax system 
D) stronger domestic currency

Question 14

Which of the following statements is correct?

Accepted Answer

A) the economy's capacity to pay off its debt can grow over time 
B) the government cannot run a budget deficit forever, because productivity cannot increase over time 
C) as long as the government debt grows faster than the economy's income, government deficits can grow forever 
D) as long as the government debt grows more slowly than the economy's income, government deficits cannot grow forever 
A) the economy's capacity to pay off its debt can grow over time 
B) the government cannot run a budget deficit forever, because productivity cannot increase over time 
C) as long as the government debt grows faster than the economy's income, government deficits can grow forever 
D) as long as the government debt grows more slowly than the economy's income, government deficits cannot grow forever

Question 15

Some economists believe that policymakers should not try to stabilise the economy.What is the reason?

Accepted Answer

A) the policymakers' goal is economic boom 
B) policy effects occur immediately 
C) economic conditions change over time 
D) none of the above 
A) the policymakers' goal is economic boom 
B) policy effects occur immediately 
C) economic conditions change over time 
D) none of the above

Question 16

Any attempt to encourage saving via tax reform can actually reduce national saving because saving is _____.

Accepted Answer

A) relatively inelastic 
B) relatively elastic 
C) perfectly inelastic 
D) perfectly elastic 
A) relatively inelastic 
B) relatively elastic 
C) perfectly inelastic 
D) perfectly elastic

Question 17

Proponents of the monetary policy rule argue that discretionary monetary policy may lead to:

Accepted Answer

A) incompetence 
B) abuse of power 
C) severe inflation than is desirable 
D) all of the above 
A) incompetence 
B) abuse of power 
C) severe inflation than is desirable 
D) all of the above

Question 18

Advocates of governments' balanced budgets, believe that failure to do this will:

Accepted Answer

A) shift the burden of debt repayment to future generations 
B) create possibly unsustainable levels of debt 
C) potentially lower the standard of living in the future 
D) all of the above 
A) shift the burden of debt repayment to future generations 
B) create possibly unsustainable levels of debt 
C) potentially lower the standard of living in the future 
D) all of the above

Exam 37: Five Debates Over Macroeconomic Policy

In the 1970s, the Australian government decided to charge fees for university education.

Discretion in the conduct of monetary policy does not limit incompetence and abuse of power.

Which of the following statements is correct?

Economies can be left to find their own solution.

Reducing inflation is a policy with temporary costs and permanent benefits.

If the government's plan is credible, then:

What are the costs of inflation for society?

Which of the following is not the cost of reducing inflation to zero?

Proponents of the balanced government budget argue that:

Which of the following is the benefit of reducing inflation to zero?

Citing an example, explain why the Reserve Bank of Australia (and its Governor) is independent of the government.

Which of the following is not part of the cost of inflation?

Which of the following statements is correct?

Some economists believe that policymakers should not try to stabilise the economy.What is the reason?

Any attempt to encourage saving via tax reform can actually reduce national saving because saving is _____.

Proponents of the monetary policy rule argue that discretionary monetary policy may lead to:

Advocates of governments' balanced budgets, believe that failure to do this will:

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Filters