CHAPTER 36 - Chapter36 FiveDebates 1 Stabilization...

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Chapter 36/Five Debates over Macroeconomic Policy 213 Chapter 36 Five Debates over Macroeconomic Policy 1. Stabilization policy is useful because a. there is no reason for society to suffer through the booms and busts of the business cycle. b. the economy would stabilize itself too quickly without government intervention. c. there are significant lags due to the nature of the political process. d. All of the above are correct. ANSWER: a there is no reason for society to suffer through the booms and busts of the business cycle. SECTION: 1 OBJECTIVE: 1 2. The Federal Reserve will tend to tighten monetary policy when 3. If the Federal Reserve loosened monetary policy today because it believed a recession was going to  hit the economy in about one year, this is an indication that the Fed 4. When economists say that there is a time lag in the effect of monetary policy, they mean that 5. The outcome of monetary policy can never be certain because a. unemployment is always changing. b. the concept of a natural rate of unemployment is still not accepted by all policy actions. c. the slope of the AS curve is never clear. d. time lags disrupt policy planning. ANSWER: d time lags disrupt policy planning. SECTION: 1 OBJECTIVE: 1
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214 Chapter 36/Five Debates over Macroeconomic Policy
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