13,17,18 final inter. macro

The IS-LM model is best equipped to help economists analyze: A. the long run. B. the short run. C. the supply side of the economy. D. inflationary pressures

the short run.

hey you got this girl

shorty

According to the idea of Ricardian equivalence, what effect will a debt-financed tax cut have on saving? A. Only public saving will change. B. National saving will rise. C. Public saving will rise and private saving will fall. D. National saving will not change

National saving will not change

What do we call the time between policy action in response to a shock to the economy and the policy's impact on the economy? A. Outside lag B. Policy lag C. Inside lag D. Policy gap

Outside lag

What is the hypothesis that consumers will increase saving rather than spending after a tax cut? A. Adaptive expectations B. Ricardian equivalence C. Uncounted liabilities D. Rational expectations

Ricardian equivalence

Why might the strict monetarist prescription of steady growth in the money supply not be the best possible policy? A. The growth rate might be subject to political pressure. B. A steady growth rate in the money supply may keep the growth rate of GDP low .C. The neutrality of money makes the money supply irrelevant. D. Shocks may change the velocity of money.

Shocks may change the velocity of money

Which law first established the federal government's responsibility for macroeconomic performance? A. The National Labor Relations Act B. The Employment Act of 1946 C. The Fair Labor Standards Act of 1938 D. The Full Employment and Balanced Growth Act (Humphrey-Hawkins Act)

The Employment Act of 1946

In the IS-LM model, which will follow a decrease in government purchases? A. The LM curve shifts to the left. B. The LM curve shifts to the right .C. The IS curve shifts to the left. D. The IS curve shifts to the right

The IS curve shifts to the left.

In the IS-LM model, which will follow a decrease in the money supply? A. The LM curve shifts to the left. B. The LM curve shifts to the right .C. The IS curve shifts to the left. D. The IS curve shifts to the right.

The LM curve shifts to the left.

What do we call the observation that traditional methods of policy evaluation do not adequately account for the impact of policy on expectations? A. Rational expectations B. Adaptive expectations C. The Fisher effect D. The Lucas critique

The Lucas critique

Which statement does NOT provide evidence for the spending hypothesis, which has been proposed to explain the Great Depression? A. The end of World War I led to a drastic reduction in government purchases .B. Residential overbuilding in the 1920s led to a dramatic decline in investment in the1930s. C. The drop in immigration in the 1930s resulted in a drop in demand for new housing. D. Policymakers sought to raise taxes and cut government spending

The end of World War I led to a drastic reduction in government purchases

What is a cyclically adjusted budget deficit? A. The component of the deficit caused by changes in the business cycle B. The estimated budget deficit at full employment C. The portion of the deficit that becomes part of the government debt D. The measured deficit at the trough in the business cycle

The estimated budget deficit at full employment

Which variable is constant in the IS-LM model? A. The interest rate B. The money supply C. Nominal output D. The price level

The price level

What impact does a high inflation rate have on the government debt? A. The government can pay its debt with dollars that are worth more. B. The government must offer higher interest rates to attract borrowers. C. Crowding out becomes a more serious issue. D. The real debt rises much less than the nominal debt.

The real debt rises much less than the nominal debt.

What lesson do we draw from the debt-deflation theory? A. Deflation is stabilizing because lower prices push the economy back to full employment. B. Debtors tend to adjust spending less that creditors when there is a demand-side shock. C. Unexpected deflation enriches creditors and impoverishes debtors. D. Deflation leads to debtors spending more and creditors spending less.

Unexpected deflation enriches creditors and impoverishes debtors.

Which statement is TRUE regarding government debt in the United States? A. The debt-to-GDP ratio has always been below 1. B. The debt-to-GDP ratio was about 0.4 after the Revolutionary War and has remained at about that level since. C. Among historical events, the Great Depression had the greatest impact on the U.S.debt-to-GDP ratio. D. With a few exceptions, wars have resulted in steep spikes in the debt-to-GDP ratio

With a few exceptions, wars have resulted in steep spikes in the debt-to-GDP ratio

What is capital budgeting? A. The budgeting process in the capital B. Creating a budget for the capital separate from that for the rest of the nation C. The budget for capital expenditures, separate from the budget for labor D. A budget that considers both assets and liabilities

A budget that considers both assets and liabilities

Which is an implication of the Lucas critique? A. There is no short-run tradeoff between inflation and unemployment. B. There is no long-run tradeoff between inflation and unemployment. C. Fiscal policy has a longer inside lag than monetary policy .D. A credible announcement of a change in monetary policy will shift the Phillips curve.

A credible announcement of a change in monetary policy will shift the Phillip curve.

Which was NOT a shock that led to the recession of 2001? A. A fall in the stock market B. A financial crisis arising from mortgage defaults C. Widely publicized accounting scandals D. The September 11 terrorist attacks

A financial crisis arising from mortgage defaults

What is NOT an argument for optimal fiscal policy versus a balanced budget amendment? A. Optimal fiscal policy enables the government to avoid distortions to incentives that might arise if the government had to frequently change tax rates to follow a balanced-budget rule. B. Optimal fiscal policy enables the government to spend heavily on emergencies,such as wars, and place some of the tax burden for these outlays on future generations, who also benefit from such spending .C. A government budget deficit may crowd out capital and depress economic growth in the long run. D. A balanced-budget amendment would prevent automatic stabilization of the economy through taxes and transfers

A government budget deficit may crowd out capital and depress economic growth in the long run.

Which county's government holds financial assets that exceed its debt? A. Australia B. Germany C. Japan D. Netherlands

Australia

What is meant by quantitative easing? A. Reducing the federal funds rate' B. Buying long-term government bonds, mortgage-backed securities, and corporate debt C. Increasing the M2 money supply D. Buying short-term government bonds

Buying long-term government bonds, mortgage-backed securities, and corporate debt

According to the text, what is the most likely reason for climbing health care costs? A. An aging population B. Expensive new medical advances C. Unnecessary testing and treatment D. Lawsuits

Expensive new medical advances

Which statement about policy lags is TRUE? A. Fiscal policy has a longer inside lag and monetary policy has a longer outside lag. B. Fiscal policy has a shorter inside lag and monetary policy has a shorter outside lag. C. Fiscal policy has a longer inside lag but the outside lag is the same for both fiscal and monetary policy. D. Fiscal policy and monetary policy have the same inside lag but monetary policy has a longer outside lag.

Fiscal policy has a longer inside lag and monetary policy has a longer outside lag.

Which is NOT a monetary policy mentioned in the chapter? A. Flexible exchange rates B. Steady growth in the money supply C. Nominal GDP targeting D. Inflation targeting

Flexible exchange rates

Which is NOT likely to follow a rapid and large increase in government debt? A. Crowding out of private investment B. Increased foreign direct investment in the domestic economy C. Capital flight from the domestic economy D. Loss of political influence

Increased foreign direct investment in the domestic economy

What do we call the time between a shock to the economy and the enactment of policies to counter the shock? A. Outside lag B. Policy lag C. Inside lag D. Policy gap

Inside lag

What do economists call a situation in which an increase in the money supply is not followed by a drop in the interest rate? A. Forward guidance B. Liquidity trap C. Expected deflation D. Quantitative easing

Liquidity trap

What is the political business cycle? A. The six-year period of a Senator's term, which includes elections for the House and the President B. Manipulation of the economy prior to an election to improve the electoral prospects of an incumbent government. C. The term of the Chairperson of the Federal Reserve System D. The outcome(s) of elections occurring between two peaks of the business cycle

Manipulation of the economy prior to an election to improve the electoral prospects of an incumbent government.

Central-bank independence is strongly associated with: A. lower average unemployment rates. B. higher real GDP growth. C. lower inflation .D. a less volatile business cycle

lower inflation