Exam 16: Macro Policy Debate: Active or Passive

Exhibit 15-3 -Refer to the graph in the exhibit.Suppose the economy started near point b, and government purchases increased.Toward what point would the economy be expected to move in the short run?.toward point a  

According to the natural rate hypothesis, at what cost can unemployment be maintained below the natural rate?  

What was one result of the inflation associated with the oil embargoes of the 1970s?  

Suppose a passive approach to policy is followed.How would an expansionary gap eventually close?  

Suppose a recession surprises economic forecasters.Which term refers to the time it takes forecasters to recognize the recession?  

What relationship does the Phillips curve illustrate?  

Which of the following is a statement that would be made by an opponent of inflation targets?  

What term refers to the period of time when a new policy is being selected?  

For policymakers who favour an active approach, why are public policy changes considered necessary for curing a recessionary gap?  

Suppose that policymakers are concerned about a shortage of long-term capital investment.To remedy the problem, the policymakers have suggested various plans to cut capital gains taxes.What term refers to the delay that is incurred while a plan is being selected?  

Suppose the economy is in a recession.Which of the following policies would is most likely to be supported by a person who favours an active approach to policy?  

In general, the Bank of Canada has NOT embraced a fixed-growth-rate monetary policy.Why is this the case?  

What does the initial Phillips curve relationship imply is the opportunity cost of reducing unemployment?  

In the long run, how would an active approach to a recessionary gap differ from a passive approach to policy?  

What term refers to the time it takes for the Bank of Canada's purchase of government securities to ultimately change aggregate demand?  

Exhibit 15-1 -Refer to the graph in the exhibit.According to policymakers who favour an active approach to policy, where will the economy end up when potential output is achieved?  

Suppose the natural unemployment rate CANNOT easily be calculated.What type of policy is more difficult to implement under these circumstances?  

Exhibit 15-3 -Refer to the graph in the exhibit.What is the natural rate of unemployment?  

Exhibit 15-1 -Refer to the graph in the exhibit.According to policymakers who favour a passive approach to policy, where will the economy end up when potential output is achieved?  

According to the active policy position, how should policymakers eliminate a recessionary gap?