Exam 18: Theory Versus Reality

Explain why new classical economists favor a laissez faire policy approach.

Which of the following does not help to explain why politicians might hesitate to balance the budget in an election year?

Since World War II,the business cycle has been characterized by

Refer to Figure 18.2.A decrease in the discount rate would most likely result in

Monetarists believe that

The number of times per year,on average,that a dollar is used to purchase final goods and services is the

Which of the following groups believes that the money supply is the critical policy lever?

The modern Keynesian approach to cure a recession might include

Which of the following policy obstacles could occur because it is difficult to know how market participants will respond to specific policies?

According to the model of the macro economy in Figure 18.3,a shift from LRAS₁ to LRAS₂ will cause,ceteris paribus,

The multiple by which an initial change in aggregate spending will alter total expenditure after an infinite number of spending cycles is the

The idea that no one knows for certain the shape of the aggregate supply curve contributes to

Since World War II,the U.S.economy has met its goals of full employment,price stability,and economic growth every year.

Which economists believe a decrease in marginal tax rates will ultimately cause the economy to move from point B to point D in Figure 18.3?

The decision concerning how the dollars left over from a defense cutback will be distributed is an example of

Even if everyone agreed on policy priorities,there would still be trade-offs related to economic policy.

Which of the following supports the argument for hands-on policy?

Do monetarists favor rules or discretionary policy? Why?

The aggregate supply curves shown in the model in Figure 18.3 are most consistent with the views of

Advocates of "fixed policy rules" believe