Exam 36: Five Debates Over Macroeconomic Policy

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.

What's the basis for arguing that deficits are likely to lead to lower living standards in the future?

U.S.public policy discourages saving because

Many studies indicate changes in monetary policy have most of their effect on aggregate demand about six months after the change is made.

Over time continued budget deficits lead to

The national debt

Studies have shown significant spending changes arise from interest rate changes only after

Inflation reduction has the lowest cost when the efforts are

Proponents of zero-inflation policies acknowledge that the public is unconcerned about the inflation rate.

Which country does not use inflation targeting in its monetary policy process?

The Federal Reserve will tend to tighten monetary policy when

The major driver of future federal spending is

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

A decrease in the tax rate is more likely to increase national saving if

Social Security and government health-insurance programs account for

Is it possible that deficits do not burden future generations?

Proponents of a balanced government budget acknowledge that running a budget deficit is justifiable in time of war.

The Federal Reserve operates under a rule that requires money supply growth by one percentage point for every percentage point that unemployment rises above its natural rate.

Which of the following likely occurs when households and firms are pessimistic?