Exam 32: Alternative Views in Macroeconomics

The Lucas supply function implies that only anticipated policy changes have an effect on real output.

The velocity of money is the ratio of

The Fed increases money supply. In this case, the time lag problem of monetary policy may

Data suggests that the tax cuts of the 1980s significantly decreased the supply of labor in the United States.

Assume that the substitution effect dominates the income effect. When workers experience a positive price surprise, they

Monetarists believe that real output is determined by

Those who believe in the rational expectations hypothesis advocate ________ policy intervention.

The velocity of money is 3. If nominal GDP is $1,500 billion then the stock of money is

According to the Lucas supply function, ________ affect(s) both actual and expected price levels in the same way.

Refer to the information provided in Figure 32.1 below to answer the question(s) that follow. Figure 32.1 -Refer to Figure 32.1. A decrease in tax rates will definitely decrease tax revenue if the economy is at a point such as ________ on the Laffer Curve.

The implicit assumption behind the Economic Recovery Tax Act of 1981, which cut the individual income tax rate by 25% over three years, was that

The Economic Recovery Tax Act of 1981 stipulated that individual income tax be cut ________ over three years.

According to the real business cycle theory, technological advances

According to the Laffer curve, an increase in the tax rate will increase tax revenue