chapter 36 - Chapter 36 Five Debates Over Macroeconomic...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 36 Five Debates Over Macroeconomic Policy TRUE/FALSE 1. Many studies indicate changes in monetary policy have most of their effect on aggregate demand about six months after the change is made. ANS: T DIF: 1 REF: 36-1 NAT: Analytic LOC: Monetary and fiscal policy TOP: Monetary policy MSC: Interpretive 2. The laws that created the Fed give the institution only vague recommendations about what goals it should pursue, and they do not tell the Fed how to pursue whatever goals it might choose. ANS: T DIF: 1 REF: 36-2 NAT: Analytic LOC: Monetary and fiscal policy TOP: Monetary policy MSC: Interpretive 3. The Federal Reserve operates under a rule that requires money supply growth by one percentage point for every percentage point that unemployment rises above its natural rate. ANS: F DIF: 1 REF: 36-2 NAT: Analytic LOC: Monetary and fiscal policy TOP: Monetary policy MSC: Interpretive 4. Proponents of a balanced government budget acknowledge that running a budget deficit is justifiable in time of war. ANS: T DIF: 1 REF: 36-4 NAT: Analytic LOC: Monetary and fiscal policy TOP: Government debt MSC: Interpretive 5. In effect, a consumption tax would put all saving automatically into a tax-advantaged savings account similar to an Individual Retirement Account (IRA). ANS: T DIF: 2 REF: 36-5 NAT: Analytic LOC: Monetary and fiscal policy TOP: Taxes, saving MSC: Interpretive 6. One prominent debate over macroeconomic policy centers on the question of whether monetary and fiscal policy should be used to try to stabilize the economy. ANS: T DIF: 1 REF: 36-1 NAT: Analytic LOC: Monetary and fiscal policy TOP: Stabilization policy MSC: Interpretive 7. Peoples skepticism about central bankers announcements of their intentions stems from the fact that policymakers may act in a fashion that is time inconsistent . ANS: T DIF: 2 REF: 36-2 NAT: Analytic LOC: Monetary and fiscal policy TOP: Monetary policy MSC: Interpretive 8. Proponents of zero-inflation policies acknowledge that the public is unconcerned about the inflation rate. ANS: F DIF: 1 REF: 36-3 NAT: Analytic LOC: Monetary and fiscal policy TOP: Inflation MSC: Interpretive 9. Proponents and opponents of balanced-budget policies agree that the government debt cannot continue to increase forever. ANS: F DIF: 1 REF: 36-4 NAT: Analytic LOC: Monetary and fiscal policy TOP: Government debt MSC: Interpretive 66 67 Chapter 36/Five Debates Over Macroeconomic Policy 10. A recession has no benefit to society-it represents a sheer waste of resources. ANS: T DIF: 1 REF: 36-1 NAT: Analytic LOC: The study of economics and definitions in economics TOP: Stabilization policy MSC: Definitional 11. A "lean against the wind" policy says the government should not use stabilization policy and simply let the economy "weather the storm." ANS: F DIF: 1 REF: 36-1 NAT: Analytic LOC: Monetary and fiscal policy TOP: Stabilization policy MSC: Definitional 12. Advocates of stabilization policy argue that when there is a recession, the government should increase the...
View Full Document

This note was uploaded on 02/16/2012 for the course EDU 112 taught by Professor Adasd during the Spring '12 term at Alabama A&M University.

Page1 / 30

chapter 36 - Chapter 36 Five Debates Over Macroeconomic...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online