124 Final

One reason the Bretton Woods intermational monetary system came to an end was because Select one or more: a. The Nixon administration signaled to the Federal Reserve that it wanted interest rates to stay low b. The Nixon administration was unwilling to let the dollar be devalued c. The Nixon administration was unwilling to take action to reduce unemployment d. The Nixon administration adopted austerity fiscal policies to reduce the governments budget deficits e. The Nixon administration signaled to the Federal Reserve that it wanted interest rates to go up

A

Which of the following statements are true of the relationship between macroeconomic policy and exchange rates? Select one or more: a. Floating exchange rates make it easier for a government to stimulate the economy by lowering interest rates b. Fixed exchange rates make it easier for a government to stimulate the economy by raising interest rates c. Floating exchange rates make it more difficult for a government to stimulate the economy by lowering interest rates d. Fixed exchange rates make it more difficult for a government to stimulate the economy by raising interest rates e. Exchange rate policy has no effect on the ability of governments to stimulate the economy with monetary policy

A

ccording to Keynes, Select one or more: a. Governments should increase spending during times of unemployment in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and create jobs to produce enough to meet demand b. Governments should cut taxes during times of unemployment in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and create jobs to produce enough to meet demand c. Governments should reduce interest rates during times of unemployment in order to increase borrowing for items such as cars and houses, which will motivate businesses to invest and create jobs to produce enough to meet demand d. Governments should increase spending at all times in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and increase long-term growth e. The economy will automatically and efficiently return to full employment because when unemployment increases, wages will fall, which will motivate businesses to hire more workers

ABC

According to the Unholy Trinity, if governments have the three following policy goals, they must choose two and sacrifice the third: Select one or more: a. A fixed exchange rate b. Low taxes c. Capital mobility d. Monetary autonomy e. Trade surplus

ACD

Governments of advanced industrial economies increased their role in the government, such as attempting to achieve full employment, after World War 2 because Select one or more: a. There was a shift in political power away from the propertied classes to the working class b. There was a shift in political power away from the landed gentry to the urban industrialists c. There was a shift in ideas call neoliberal economics d. There was a shift in ideas called the Keynesian Revolution e. The United States used its position as a hegemon to force other governments to change their policies

AD

According to the Sectoral Model of Monetary and Exchange Rate Politics, Select one or more: a. Sectors that intensively use comparatively scarce factors prefer a floating exchange rate because a floating exchange rate enables macroeconomic stimulus b. Sectors that intensively use comparatively abundant factors prefer a floating exchange rate because a floating exchange rate enables macroeconomic stimulus c. Export-oriented producers prefer a fixed exchange rate because a fixed exchange rate enables macroeconomic stimulus d. Sectors that intensively use comparatively abundant factors prefer an undervalued exchange rate e. Export-oriented producers prefer a fixed exchange rate because they are heavily engaged in international trade

ADE

According to the Partisan Model of Monetary and Exchange Rate Politics, Select one or more: a. An increase in interest rates will result in lower unemployment but carries the risk of higher inflation b. There is a tradeoff between low unemployment and low inflation c. Left wing parties tend to favor low interest rates and a floating exchange rate more than right wing parties d. Left wing parties tend to favor low interest rates and a fixed exchange rate more than left right wing parties e. An decrease in interest rates will result in lower unemployment but carries the risk of higher inflation

BCE

When Francois Mitterand became president of France, Select one: a. He pursued policies to maintain low inflation, reflecting his party's support by workers, then was obliged to cut interest rates when businesses protested high interest rates b. He pursued policies to increase economic growth, reflecting his party's support by businesses, then was obliged to peg the Franc to the German mark in response to foreign speculators c. He pursued policies to reduce unemployment, reflecting his party's support by workers, then was obliged to abandon its floating exchange rate policy and peg the Franc to the German mark in response to foreign speculators d. He pursued policies to maintain low inflation, reflecting his party's support from business interests, then was obliged to cut interest rates when voters protested high interest rates e. He pursued policies to reduce unemployment, reflecting his party's support by workers, then was obliged to devalue the Franc in response to foreign speculators

E

According to the graphs Dube creates showing the relationship between debt per GDP and economic growth, high levels of debt per GDP are a strong indicator of poor economic growth in the past, but not a strong predictor of poor economic growth in the future. Select one: True False

True