Exam 32: Macroeconomic Policy Around the World

The body of economic thought associated with 19th century economist

According to new classical economics, short-run stabilization policy works only if it surprises people.

If the economy's short-run aggregate supply curve is upward sloping, a decrease in aggregate demand will cause

Which of the following was not an explanation for the lower volatility of the U.S. economy during the 25-year period that preceded the Great Recession?

In the 1960s, despite the successful application of expansionary fiscal policy in the United States, Milton Friedman argued that

According to Keynesian theory,

New classical economists argue that unless people are taken by surprise, a decrease in aggregate demand will cause

The hypothesis that assumes that individuals form expectations about the future based on Available information and that individuals act on that information is called the

Keynes shifted the emphasis in economics from the concept of aggregate supply to the concept of aggregate demand.

David Ricardo focused on the economy in the _______ and on the forces that determined an Economy's _______.

The monetarist school of economics believes that changes in the money supply are the primary causes of changes in nominal GDP.

Figure 17-1 -Refer to Figure 17-1. Which price level and output level best illustrates where the U.S. economy was before the Great Depression began?

An important distinction between the classical and Keynesian view of the economy is that

In 1979, the CPI rose 13.5%, the highest inflation rate recorded in the twentieth century in the U.S. Public opinion polls in 1979 consistently showed that most people regarded inflation as the leading problem facing the U.S. How did the Fed respond to this situation?

If prices and wages are sticky, a decrease in aggregate demand will cause

The theory that dominated macroeconomic thinking in the 1960s was

Monetarists argue that impact lags associated with changes in the money supply are long and variable.

When consumers and producers operate under rational expectations,

In the initial stages of the Great Depression, fiscal authorities responded to the decline in Output by

What are the main arguments in favor of stabilization policy? What are the main arguments against stabilization policy?