Baidu Macroeconomics Week 1 - An Overview of Modern Macroeconomics

Both 1 and 2 1. Changes in government expenditures 2. Changes in taxes

Fiscal policy relies on:

All of the above Business executives interested in implementing their plans and strategies Policymakers interested in fighting recession or inflation Stock market investors interested in allocating funds to various assets

Forecasting the business cycle is important to:

Cost-push Inflation

If a world wide drought causes a rise in food prices and conflict in the Middle East causes oil prices to rise, this will contribute to:

Inflation

If actual output is above potential output, we run the risk of:

It goes up

If consumer confidence falls and unemployment rises, what happens to the probability of a recession?

Falls

If price inflation rises faster than wages, what happens to our purchasing power?

Increase government spending and cut taxes

If the government wants to use fiscal policy to stimulate the economy, it will:

Decrease the money supply

If the government wants to use monetary policy to fight inflation, it will:

Demand-pull inflation

President Lyndon Johnson's refusal to cut his Great Society programs to finance the Vietnam War resulted in:

Nominal GDP minus inflation

Real Gross Domestic Product (GDP) is equal to:

Lower taxes to lower the budget deficit

Supply side economics promises to:

Consumption, Investment, Government spending, and net exports

The "Flow of Expenditures" approach is calculated by adding:

The economy is self-correcting

The Classical economists believed that:

Keynesian economics

The Kennedy Tax Cut of 1964 was a modern day version of:

Printing too much money

The Monetarists believe that inflation is caused by:

Was moderately successful

The application of a massive fiscal and monetary policy after the Great Recession of 2007:

False

The theory of Rational Expectations supports the use of discretionary fiscal and monetary policies to control inflation and solve unemployment.

Benefit Borrowers

Unexpected inflation can:

All of the above Wars in Iraq and Afghanistan Collapse of a housing bubble China's entry into the World Trade Organization

What contributed to the slow growth of the United States during the 2000s?

Stimulating the economy to cure unemployment increases inflation

What is the Keynesian dilemma when it comes to curing stagflation?

Stagflation

When the economy simultaneously suffers from inflation and unemployment, this is called:

The PPI

Which type of inflation index measures changes in the cost of important raw materials?

Cyclical

Which type of unemployment do economists primarily focus on curing?

The 1990s

Which was the most prosperous decade?

John Maynard Keynes

Who famously said "in the long run, we're all dead."