Exam 17: Macro Policy Debate: Active or Passive

According to the rational expectations school,if the Fed announces a policy of rapid growth in the money supply,but then puts the brakes on money expansion without any announcement,the short-run result is likely to be

The average U.S.recession (after World War II)has lasted

The short-run Phillips curve is based upon labor contracts that reflect a given expected

In the early 1960s,the discovery of the Phillips curve relationship caused economists and policy makers to think that they understood the tradeoffs between

A policy to increase aggregate demand to cure a contractionary gap may succeed; however,inflation is a likely result.

A new policy is actually put in force during the

Those who favor a passive approach to policy think that all of the following conditions will allow the economy to bring itself out of a contractionary gap except one.Which is the exception?

Suppose the economy had been operating along a given short-run Phillips curve for several years and then experienced a year of stagflation.The year of stagflation would

An implementation lag is the time it takes

Which of the following would eliminate the time inconsistency problem?

Which of the following lags reduces the effectiveness of active policy?

After the 1960s,the short-run Phillips curve based on U.S.economic data

According to the rational expectations school,when the economy is operating at the potential output level,a temporary decrease in unemployment is possible through appropriate monetary policy--but only if workers and employers are aware in advance of the Fed's intentions.

According to the rational expectations school,which of the following can affect the levels of output and employment?

Which of the following pieces of information is not necessary for active policy to work successfully?

According to the rational expectations school,

Exhibit 16-2 -According to those who favor an active approach to policy,how can the economy shown in Exhibit 16-2 attain equilibrium at potential output?

According to the natural rate hypothesis,the economy tends toward

The main policy conclusion of the rational expectations school is

Some economists believe that when workers and firms come to expect an expansionary monetary policy and the resulting inflation,