Question 1

________ recessions pose major macropolicy dilemmas.

Accepted Answer

The answer of ________ recessions pose major macropolicy dilemmas....

Question 2

Say's law was the centerpiece of

Accepted Answer

A)  Keynesian economics.
B)  communism.
C)  classical economics.
D)  rational expectations theory.E) A) and C)
F) B) and C)

Question 3

Rational expectations refer to

Accepted Answer

A)  the use of all available information in forecasting economic variables.
B)  the use of aggregate supply to forecast unemployment.
C)  the use of opportunity costs to forecast inflation.
D)  disinflation.E) B) and C)
F) None of the above

Question 4

Keynesian economists tend to believe that the private sector of the economy (households and businesses) is inherently

Accepted Answer

A)  very stable in its consumption and investment decisions.
B)  unstable in its consumption and investment decisions.
C)  smaller than the foreign trade sector of the economy.D) A) and B)
E) A) and C)

Question 5

The most prominent classical economist was

Accepted Answer

A)  Karl Marx.
B)  Adam Smith.
C)  John Maynard Keynes.
D)  Milton Friedman.
E)  John Stuart Mill.F) C) and E)
G) A) and B)

Question 6

A conclusion of the theory of rational expectations is that the impact of discretionary fiscal policies designed to shift the aggregate demand curve will

Accepted Answer

A)  result in no net change in aggregate demand.
B)  be anticipated and compensated for,causing no significant change in real GDP or employment levels.
C)  be completely opposite of the intended result.
D)  be incorrectly evaluated by most economists.
E)  cause potential GDP to increase.F) A) and D)
G) A) and C)

Question 7

Supply-side economics would include such policies as

Accepted Answer

A)  open-market operations in which the Fed sold its supply of bonds.
B)  raising government spending to stimulate the multiplier effect.
C)  cutting marginal income tax rates.
D)  erecting tariff barriers to protect American jobs.
E)  eliminating depreciation as a tax-deductible business expense.F) B) and D)
G) B) and E)

Question 8

What was the dominant economic theory used to attempt to recover from the Great Recession?

Accepted Answer

A)  Classical
B)  Monetarist
C)  Keynesian
D)  Behaviorist
E)  Supply sideF) B) and D)
G) A) and E)

Question 9

The velocity of circulation of money is typically greater than 1

Accepted Answer

A)  under no circumstances.
B)  only if the unemployment rate is relatively low.
C)  because the same money is exchanged a number of times each year.
D)  because of inflation.
E)  only if the Fed is pursuing an expansionary monetary policy.F) C) and D)
G) A) and B)

Question 10

If people behave as the rational expectations school thinks they do,one result is that adjustments in real output to monetary and fiscal policy changes are

Accepted Answer

A)  smaller.
B)  larger.
C)  less predictable.
D)  in the opposite direction from that predicted by standard analysis.E) A) and D)
F) A) and C)

Question 11

-Which tax rates result in zero tax revenue?

Accepted Answer

A)  F and G
B)  G and H
C)  F and H
D)  0 and 100%
E)  All of the choices are correctF) B) and E)
G) A) and D)

Question 12

According to the monetary rule,for price stability given real growth in the economy of 3 percent annually,the money supply should

Accepted Answer

A)  decrease 1% each year.
B)  decrease 3% each year.
C)  increase 1% each year.
D)  increase 3% each year.
E)  not change from year to year.F) A) and E)
G) A) and D)

Question 13

The theory of rational expectations concludes that

Accepted Answer

A)  by reacting to the expected effects of a stabilization policy,the public will tend to negate the impact of that policy.
B)  the public's expectations as to the effects of economic policies will tend to reinforce the effectiveness of those policies.
C)  the public's expectations can influence the outcome of fiscal policy,but not of monetary policy.
D)  the public's expectations can influence the outcome of monetary policy,but not of fiscal policy.E) A) and D)
F) None of the above

Question 14

According to the crude quantity theory of money,if M were to increase by 15%,what would happen to V,P,and Q?

Accepted Answer

V and Q wo...

Question 15

Lowering tax rates was the main priority of the

Accepted Answer

A)  classicals.
B)  Keynesians.
C)  monetarists.
D)  supply-siders.
E)  economic behaviorists.F) A) and B)
G) B) and D)

Question 16

The conventional fiscal policy to fight inflation would be to

Accepted Answer

A)  increase the rate of monetary growth.
B)  decrease the rate of monetary growth.
C)  run a government surplus.
D)  run a government deficit.E) B) and C)
F) None of the above

Question 17

The theory of ___________ concludes that by reacting to the expected effects of a stabilization policy,the public will tend to negate the impact of that policy.

Accepted Answer

rational e...

Question 18

The _____ hypothesis is based on the assumption that the best indicator of the future is what has happened in the past.

Accepted Answer

A)  adaptive expectations
B)  rational expectations
C)  monetary
D)  supply-sideE) None of the above
F) A) and C)

Question 19

If M is 4,000,Q is 2,000,and P = 8,then V

Accepted Answer

A)  Is 2.
B)  Is 3.
C)  Is 4.
D)  Is 5.
E)  Cannot be found.F) A) and B)
G) A) and D)

Question 20

Who would agree with this statement: We live in an increasingly borderless world,in which international capital flows are rendering traditional monetary policy increasingly obsolete.

Accepted Answer

A)  Kenichi Ohmae
B)  Marc Levinson
C)  Both Kenichi Ohmae and Marc Levinson would agree.
D)  Neither Kenichi Ohmae nor Marc Levinson would agree.E) A) and B)
F) A) and C)

Exam 15: A Century of Economic Theory

The theory of ___________ concludes that by reacting to the expected effects of a stabilization policy,the public will tend to negate the impact of that policy.

Correct Answerverifiedrational e...View AnswerShow Answer

According to the monetary rule,for price stability given real growth in the economy of 3 percent annually,the money supply should

Correct AnswerverifiedShow Answer

What was the dominant economic theory used to attempt to recover from the Great Recession?

Correct AnswerverifiedShow Answer

Lowering tax rates was the main priority of the

Correct AnswerverifiedShow Answer

If M is 4,000,Q is 2,000,and P = 8,then V

Correct AnswerverifiedShow Answer

The velocity of circulation of money is typically greater than 1

Correct AnswerverifiedShow Answer

-Which tax rates result in zero tax revenue?

Correct AnswerverifiedShow Answer

Supply-side economics would include such policies as

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The most prominent classical economist was

Correct AnswerverifiedShow Answer

If people behave as the rational expectations school thinks they do,one result is that adjustments in real output to monetary and fiscal policy changes are

Correct AnswerverifiedShow Answer

Rational expectations refer to

Correct AnswerverifiedShow Answer

Say's law was the centerpiece of

Correct AnswerverifiedShow Answer

Who would agree with this statement: We live in an increasingly borderless world,in which international capital flows are rendering traditional monetary policy increasingly obsolete.

Correct AnswerverifiedShow Answer

The conventional fiscal policy to fight inflation would be to

Correct AnswerverifiedShow Answer

The theory of rational expectations concludes that

Correct AnswerverifiedShow Answer

Keynesian economists tend to believe that the private sector of the economy (households and businesses) is inherently

Correct AnswerverifiedShow Answer

The _____ hypothesis is based on the assumption that the best indicator of the future is what has happened in the past.

Correct AnswerverifiedShow Answer

A conclusion of the theory of rational expectations is that the impact of discretionary fiscal policies designed to shift the aggregate demand curve will

Correct AnswerverifiedShow Answer

According to the crude quantity theory of money,if M were to increase by 15%,what would happen to V,P,and Q?

Correct AnswerverifiedV and Q wo...View AnswerShow Answer

________ recessions pose major macropolicy dilemmas.

Correct AnswerverifiedShow Answer

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V and Q wo...
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Correct Answer
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