Exam 18: Events and Ideas

Classical economists focused on short-run effects of monetary policy.

Milton Friedman and Anna Schwartz wrote:

Since fiscal policy can be manipulated by partisan political interests:

Which of the following years is often described as the worst year of the Great Depression?

Nearly all economists agree that increases in money supply can _____ aggregate _____.

Monetarists argue that discretionary monetary policy does more harm than good.

Discretionary fiscal policy may destabilize the economy because of lags in implementing policy and lags in the effect of fiscal policy on the economy.

Since 2005, Latvia has _____ government spending and had a sharp _____ in economic growth.

Classical macroeconomists focused on the long-run effects of monetary policy on the aggregate price level and argued that it had no short-run or long-run effects on aggregate output.

Milton Friedman was the leading figure in the movement called:

A policy maker who aims at maintaining unemployment at 5% while the NAIRU for this economy is 4% will most likely find the economy running into:

Many economists favored using discretionary fiscal policy during the Great Recession because monetary policy could not be used when interest rates were near zero.

The Ricardian equivalence argument says that households and businesses view any increase in government spending as a sign that tax burdens will increase in the future, which will cause a decrease in private spending in anticipation of higher future taxes.

A fundamental feature of early classical macroeconomics is that:

According to the natural rate hypothesis:

Nearly all economists agree that fiscal policy _____ keep the economy _____.

The Great Moderation consensus is that discretionary fiscal policy can be destabilizing because of the political business cycle.

The school of economics that predominated prior to the Great Depression was the:

Opponents of quantitative easing argued that the _____ monetary policy would cause _____.

Which of the following does NOT represent the broad consensus among macroeconomists?