Question 1

Stagflation is the simultaneous occurrence of both

Accepted Answer

A) A recession and deflation 
B) A recession and inflation 
C) Inflation and rapid growth in GDP 
D) Recession and rapid growth in GDP 
A) A recession and deflation 
B) A recession and inflation 
C) Inflation and rapid growth in GDP 
D) Recession and rapid growth in GDP B

Question 2

One of the major criticisms of the supply-side emphasis on tax cuts as a way to stimulate the economy is that such cuts affect aggregate demand more than they do aggregate supply.

Accepted Answer

A) True 
 B)False  True

Question 3

What characterized the economic conditions in Canada from 1990-2008?

Accepted Answer

A) Low inflation and steady economic growth 
B) Stagflation 
C) Rising levels of unemployment but low inflation 
D) Low unemployment and high inflation. 
A) Low inflation and steady economic growth 
B) Stagflation 
C) Rising levels of unemployment but low inflation 
D) Low unemployment and high inflation. A

Question 4

The Canadian dollar has not fallen below $0.80 U.S.for over twenty years.

Accepted Answer

A) True 
 B)False

Question 5

-What is the name of the curve shown in Figure 12.7 above?

Accepted Answer

A) Phillips curve 
B) Aggregate supply curve 
C) Laffer curve 
D) Production possibilities curve 
A) Phillips curve 
B) Aggregate supply curve 
C) Laffer curve 
D) Production possibilities curve

Question 6

Over the last 20 years,Canada's inflation has been,

Accepted Answer

A) more than 4% 
B) less than 5% 
C) less than 2% 
D) less than 3% 
A) more than 4% 
B) less than 5% 
C) less than 2% 
D) less than 3%

Question 7

Which of the following statements regarding monetary policy is true?

Accepted Answer

A) Monetary policy is ineffective if a country has a fixed exchange rate. 
B) Monetary policy is more effective if a country has a fixed exchange rate rather than a flexible exchange rate. 
C) Monetary policy is equally effective whether a country has a fixed or a flexible exchange rate. 
D) Monetary policy is very effective if a country has a fixed exchange rate in times of a recession but not during an inflationary boom. 
A) Monetary policy is ineffective if a country has a fixed exchange rate. 
B) Monetary policy is more effective if a country has a fixed exchange rate rather than a flexible exchange rate. 
C) Monetary policy is equally effective whether a country has a fixed or a flexible exchange rate. 
D) Monetary policy is very effective if a country has a fixed exchange rate in times of a recession but not during an inflationary boom.

Question 8

The Laffer curve relates income levels with unemployment rates.

Accepted Answer

A) True 
 B)False

Question 9

The crowding-out effect of expansionary fiscal policy suggests that:

Accepted Answer

A) tax increases are paid primarily out of saving and therefore are not an effective fiscal device. 
B) increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment. 
C) it is very difficult to have excessive aggregate spending in the U.S.economy. 
D) consumer and investment spending always vary inversely. 
A) tax increases are paid primarily out of saving and therefore are not an effective fiscal device. 
B) increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment. 
C) it is very difficult to have excessive aggregate spending in the U.S.economy. 
D) consumer and investment spending always vary inversely.

Question 10

Which of the following best explains the Phillips curve relationship?

Accepted Answer

A) Inflation increases at a faster rate as the economy moves toward full employment. 
B) Unemployment falls as the economy moves toward full employment. 
C) Inflation decreases as the economy moves closer to full employment. 
D) As unemployment decreases,so does the rate of inflation. 
A) Inflation increases at a faster rate as the economy moves toward full employment. 
B) Unemployment falls as the economy moves toward full employment. 
C) Inflation decreases as the economy moves closer to full employment. 
D) As unemployment decreases,so does the rate of inflation.

Question 11

If Canadian policy-makers wish to maintain the value of the dollar relative to the U.S.dollar,what should they do?

Accepted Answer

A) Keep the money supply constant 
B) Continually adjust the money supply to keep interest rates in line with American rates 
C) Increase the money supply whenever the U.S.dollar starts to appreciate against the Canadian dollar 
D) Purchase American dollars 
A) Keep the money supply constant 
B) Continually adjust the money supply to keep interest rates in line with American rates 
C) Increase the money supply whenever the U.S.dollar starts to appreciate against the Canadian dollar 
D) Purchase American dollars

Question 12

According to supply-siders,what is one of the keys to curbing stagflation?

Accepted Answer

A) An increase in the money supply and a cut in government spending 
B) A decrease in the money supply and an increase in government spending. 
C) An increase in aggregate demand 
D) Convincing people to buy domestic rather than foreign-produced goods 
E) A cut in tax rates 
A) An increase in the money supply and a cut in government spending 
B) A decrease in the money supply and an increase in government spending. 
C) An increase in aggregate demand 
D) Convincing people to buy domestic rather than foreign-produced goods 
E) A cut in tax rates

Question 13

Why would Canadian monetary policy be ineffective if we fixed the value of our dollar to that of the U.S.dollar?

Accepted Answer

A) Expanding the money supply in Canada would crowd out investment spending. 
B) Contracting the money supply in Canada would crowd out investment spending. 
C) Expanding the money supply in Canada would cause a rise in interest rates and an outflow of Canadian dollars and thereby frustrate the money expansion. 
D) Expanding the money supply in Canada would cause a fall in interest rates and an outflow of Canadian dollars and thereby frustrate the money\expansion. 
A) Expanding the money supply in Canada would crowd out investment spending. 
B) Contracting the money supply in Canada would crowd out investment spending. 
C) Expanding the money supply in Canada would cause a rise in interest rates and an outflow of Canadian dollars and thereby frustrate the money expansion. 
D) Expanding the money supply in Canada would cause a fall in interest rates and an outflow of Canadian dollars and thereby frustrate the money\expansion.

Question 14

Why,according to some economists,should Canada adopt the U.S.dollar as its currency?

Accepted Answer

A) Because it would maximize foreign long-term investment in Canada 
B) Because it would enhance the Bank of Canada's monetary policy 
C) Because it would eliminate the need for active fiscal policy 
D) Because it would eliminate inflation 
A) Because it would maximize foreign long-term investment in Canada 
B) Because it would enhance the Bank of Canada's monetary policy 
C) Because it would eliminate the need for active fiscal policy 
D) Because it would eliminate inflation

Question 15

Based on the Laffer Curve,a cut in the tax rate from 100 percent to a point before the maximum level of tax revenue will:

Accepted Answer

A) decrease real GDP. 
B) increase tax revenues. 
C) decrease tax revenues. 
D) have no effect on tax revenues. 
A) decrease real GDP. 
B) increase tax revenues. 
C) decrease tax revenues. 
D) have no effect on tax revenues.

Question 16

Why have fiscal and monetary policies been criticized as tools to fight stagflation?

Accepted Answer

A) Because they are able to cure unemployment but not inflation. 
B) Because they are able to cure inflation but not unemployment. 
C) Because they are unable to cure either unemployment or inflation. 
D) Because they are unable to cure both unemployment and inflation at the same time. 
A) Because they are able to cure unemployment but not inflation. 
B) Because they are able to cure inflation but not unemployment. 
C) Because they are unable to cure either unemployment or inflation. 
D) Because they are unable to cure both unemployment and inflation at the same time.

Question 17

The Phillips Curve suggests a tradeoff between:

Accepted Answer

A) price level stability and income equality. 
B) the level of unemployment and price level stability. 
C) unemployment and income equality. 
D) economic growth and full employment. 
A) price level stability and income equality. 
B) the level of unemployment and price level stability. 
C) unemployment and income equality. 
D) economic growth and full employment.

Question 18

Deflation means that the rate of inflation is falling.

Accepted Answer

A) True 
 B)False

Question 19

The Laffer Curve is a central concept in:

Accepted Answer

A) monetarism. 
B) Keynesianism. 
C) the expectation theory. 
D) supply-side economics. 
A) monetarism. 
B) Keynesianism. 
C) the expectation theory. 
D) supply-side economics.

Question 20

-The curve in the figure above is known as the:

Accepted Answer

A) tax "wedge" curve. 
B) Okun Curve. 
C) Laffer Curve. 
D) Phillips Curve. 
A) tax "wedge" curve. 
B) Okun Curve. 
C) Laffer Curve. 
D) Phillips Curve.

Stagflation is the simultaneous occurrence of both

One of the major criticisms of the supply-side emphasis on tax cuts as a way to stimulate the economy is that such cuts affect aggregate demand more than they do aggregate supply.

What characterized the economic conditions in Canada from 1990-2008?

The Canadian dollar has not fallen below $0.80 U.S.for over twenty years.

-What is the name of the curve shown in Figure 12.7 above?

Over the last 20 years,Canada's inflation has been,

Which of the following statements regarding monetary policy is true?

The Laffer curve relates income levels with unemployment rates.

The crowding-out effect of expansionary fiscal policy suggests that:

Which of the following best explains the Phillips curve relationship?

If Canadian policy-makers wish to maintain the value of the dollar relative to the U.S.dollar,what should they do?

According to supply-siders,what is one of the keys to curbing stagflation?

Why would Canadian monetary policy be ineffective if we fixed the value of our dollar to that of the U.S.dollar?

Why,according to some economists,should Canada adopt the U.S.dollar as its currency?

Based on the Laffer Curve,a cut in the tax rate from 100 percent to a point before the maximum level of tax revenue will:

Why have fiscal and monetary policies been criticized as tools to fight stagflation?

The Phillips Curve suggests a tradeoff between:

Deflation means that the rate of inflation is falling.

The Laffer Curve is a central concept in:

-The curve in the figure above is known as the:

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

A Walk Through the Twentieth Century and Beyond

Filters

Exam 12: Macroeconomic Policy Revisited

Stagflation is the simultaneous occurrence of both

One of the major criticisms of the supply-side emphasis on tax cuts as a way to stimulate the economy is that such cuts affect aggregate demand more than they do aggregate supply.

What characterized the economic conditions in Canada from 1990-2008?

The Canadian dollar has not fallen below $0.80 U.S.for over twenty years.

-What is the name of the curve shown in Figure 12.7 above?

Over the last 20 years,Canada's inflation has been,

Which of the following statements regarding monetary policy is true?

The Laffer curve relates income levels with unemployment rates.

The crowding-out effect of expansionary fiscal policy suggests that:

Which of the following best explains the Phillips curve relationship?

If Canadian policy-makers wish to maintain the value of the dollar relative to the U.S.dollar,what should they do?

According to supply-siders,what is one of the keys to curbing stagflation?

Why would Canadian monetary policy be ineffective if we fixed the value of our dollar to that of the U.S.dollar?

Why,according to some economists,should Canada adopt the U.S.dollar as its currency?

Based on the Laffer Curve,a cut in the tax rate from 100 percent to a point before the maximum level of tax revenue will:

Why have fiscal and monetary policies been criticized as tools to fight stagflation?

The Phillips Curve suggests a tradeoff between:

Deflation means that the rate of inflation is falling.

The Laffer Curve is a central concept in:

-The curve in the figure above is known as the:

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

A Walk Through the Twentieth Century and Beyond

Filters