Exam 15: Stabilization Policy, Output, and Employment

Explain the three lags that make it difficult to time changes in discretionary policy properly.

According to the adaptive expectations hypothesis,

Which of the following is most important for the achievement of long-term prosperity and strong economic growth?

The effectiveness of monetary policy as a stabilization tool is limited by

During the 1960s, most economists believed that expansionary macro-policy

The view that individuals weigh all available evidence when they formulate their expectations about economic events (including information concerning the probable effects of current and future economic policy) is called

If the index of leading indicators and other forecasting devices suggested that the economy is moving into an inflationary boom, activists' economic policy would call for

The time period between when economic conditions change and when policy makers are aware of the change is called the

According to the rational expectations theory, expansionary monetary policy will

Why did many economists during the 1960s and 1970s  believe that expansionary macroeconomic policy that resulted in inflation would reduce the rate of unemployment?

If a country with a large government debt uses money creation to service and repay the debt, this will lead to

Starting from an initial long-run equilibrium, under the rational expectations hypothesis, an anticipated shift to a more expansionary policy will increase

Which of the following is likely to push the federal debt increasingly higher in the coming decades?

The index of leading indicators is

As the large baby-boom generation moves into the retirement phase of life, this will

Under the rational expectations hypothesis, which of the following is the most likely effect of a shift to a more expansionary monetary policy?

The privately held government debt is that portion of the national debt that

Computer forecasting models have

Most economists believe that

The variables in the index of leading indicators are included in the index because