Exam 14: Macroeconomic Policy

Most economists believe that the reduced variability of inflation in the U.S.is the result of:

The degree to which the public believes the central bank's promises to keep inflation low, even if doing so may impose short-run economic costs, is the _____ of monetary policy.

A central bank that attempts to achieve a zero rate of inflation:

An inflation hawk is someone who:

The marginal tax rate is:

Real wages can be cut without cutting nominal wages if:

The amount taxes increase when before-tax income rises by an additional dollar is called the:

An inflation _____ may be more likely to stabilize output as well as inflation because they have established credibility and _____.

The average tax rate is:

Starting from full employment at the initial target inflation rate, if there is a favorable inflation shock, then the Federal Reserve must _____ in order to return output to potential.

Central bank independence refers to situations in which central bankers:

Anchored inflationary expectations are beneficial to an economy because they:

All of the following are reasonable arguments against adopting a zero inflation target except that a zero inflation target:

The situation in which central bankers are insulated from short-term political considerations and are allowed to take a long-term view of the economy is called:

Evidence from work hours and marginal tax rates in different countries suggests that:

Central banks that practice flexible inflation targeting are ____ than central banks that practice strict inflation targeting.

An increase in marginal tax rates:

All of the following tend to make economic policymaking difficult and inexact except the:

A reduction in the marginal tax rate can cause potential output to increase by:

Starting from full employment at the initial target inflation rate, if there is an adverse inflation shock, then the Federal Reserve must _____ in order to keep inflation at the initial target level.