Exam 23: Six Debates Over Macroeconomic Policy

President Barrack Obama and Congress cut taxes and raised government expenditures during the 2008 financial crisis. According to the aggregate supply and aggregate demand, model which of these policies would tend to reduce unemployment?

Part of the argument against deficits is that they

The time inconsistency of policy implies that

Suppose the tax rate on interest income from saving were reduced.

Means-tested government benefits base benefits on

In the summer of 2008, consumers indicated that they were less optimistic about the future of the economy. Such a change in sentiment is likely to

Why might policymakers attempts to stabilize the economy do more harm than good?

Which of the following is correct? Investment tax credits

A law that requires the money supply to grow by a fixed percentage each year would eliminate

Which of the programs below would not transfer wealth from young to old generations?

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

Higher saving is associated with

Assume a central bank follows a rule that requires it to take steps to keep the price level constant. If the price level fell because of a decrease in aggregate demand and an increase in aggregate supply that kept output unchanged, then

If net exports fall, what actions could a central bank take to stabilize the economy?

Explain the time inconsistency of monetary policy.

The principal reason that monetary policy has lags is that it takes a long time for

The laws that created the Fed give it some specific recommendations about what goals it should pursue so it has little discretion in making policy.

Which of the following is not an argument by those who oppose tax-law changes to encourage saving?

An individual would suffer lower losses from an unexpectedly higher inflation rate if

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