Exam 17: Macro Policy Debate: Active or Passive

The rational expectations school advocates the passive rule of a fixed-growth-rate monetary policy because

An economy that self-corrects an expansionary gap will experience stagflation.

According to the __________ approach,__________ policy may __________ the instability of the economy.

Which of the following would correspond to movement downward along a short-run Phillips curve?

Around the world,the tendency is toward

In general,the faster inflationary expectations adjust,

Which of the following is not a valid criticism of discretionary fiscal policy?

An economy in which actual GDP is $10 billion below potential GDP

One way of expressing the meaning of the short-run Phillips curve is to say that

According to the active policy position,eliminating a recessionary gap

An anti-inflation policy that involves announcing and executing tough measures to stop inflation is called

As people come to expect higher inflation,the long-run Phillips curve shifts leftward.

One reason that long time lags hamper the effectiveness of economic policy is that

If the natural unemployment rate cannot easily be estimated,__________ policy making becomes more difficult.

Which of the following pairs of lags are typically shorter for monetary policy than for fiscal policy?

According to the natural rate hypothesis,the economy tends toward

Suppose we observe several years of falling inflation rates for an economy.Which of the following would best explain this phenomenon?

One implication of the Phillips curve analysis is that

If rational expectations cause people's price expectations to be generally correct,active policy will influence the price level but not output.

Long lags make discretionary policy less effective because