Exam 23: Six Debates Over Macroeconomic Policy

Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate supply shifts left, the central bank must

Of means tested programs and IRA's, which lower the rate of return on saving?

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

According to political business cycle theory, if the Fed wanted to increase the chances of a President's re­election, what specific actions might it take?

Which of the following are currently provisions of the U.S. tax system and discourage saving?

A balanced budget would require that when real GDP was growing rapidly,

When aggregate demand is high, risking higher inflation, those in favor of using monetary and fiscal policy to stabilize the economy might recommend

During recessions, even with no changes in policy, the deficit tends to ______ because _____________.

A reduction in the tax rate on income from saving would

Describe three costs of inflation.

An increase in government expenditures may lead people to expect that in the future taxes will rise and create greater distortions. By themselves these changes in expectations lead people to

Some economists argue that policymakers can use monetary and fiscal policy to reduce the severity of economic fluctuations. In practice, however, there are obstacles to the use of such policies. What are the primary difficulties with using monetary and fiscal policy to stabilize the economy?

A recession has no benefit to society-it represents a sheer waste of resources.

Which of the following is not correct?

Which part of the Federal Reserve determines monetary policy? How often does it meet? What does it set a target for?

In 2009 President Barack Obama responded to recession

A 1977 amendment to the Federal Reserve Act of 1913

IRAs, and 401k) and 403b) plans

A program to reduce inflation is likely to have higher costs if the sacrifice ratio is

Which of the following is correct?