Nordhauss theory of political business cycles

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Chapter 18 / Exercise 26
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32.Nordhaus’s theory of political business cycles suggests that(a) Democrats care more about unemployment relative to inflation than Republicans do.(b) Republicans are likely to cause recessions in their first terms of office.(c) politicians will use expansionary policy to stimulate the economy in election years.(d) the state of the economy has little influence on elections.Answer: C
Level of difficulty: 1Section: 12.233.Combining the partisan theory with rational expectations and the expectations-augmented Phillipscurve led Alesina to theorize that when a Democrat is elected as President, inflation will be _____than expected, while unemployment will _____.
Level of difficulty: 1Section: 12.2
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Chapter 18 / Exercise 26
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Chapter 12Unemployment and Inflation19134.One reason for the fall in the natural rate of unemployment since 1980 is
Level of difficulty: 1Section: 12.235.Hysteresis in unemployment means
Level of difficulty: 1Section: 12.236.The idea that the natural rate of unemployment rises when the actual rate of unemployment rises isknown as(a) stabilization.(b) insider-outsider theory.(c) hysteresis.(d) an efficiency wage model.Answer: C
Level of difficulty: 1Section: 12.237.The insider-outsider theory suggests that
Level of difficulty: 1Section: 12.238.Empirical evidence by Burtless on the effect of unemployment insurance on unemployment suggeststhat
Level of difficulty: 1Section: 12.2
192Abel/Bernanke • Macroeconomics, Fifth Edition

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