Exam 16: Theory and Reality

The shape of the aggregate demand curve is the most important determinant of the effectiveness of fiscal and monetary policy.

If a president announces that he will balance the budget,increase spending on education,leave taxes alone,and reduce inflation,this is an example of:

An automatic stabilizer is:

Refer to Figure 16.2. -Refer to Figure 16.2.The sale of bonds by the Fed in the open market will result in:

Monetary policy relies on the use of money and credit controls to shift the aggregate demand curve.

Supply-side policy includes:

Stagflation results when high inflation and high unemployment occur simultaneously.

During a recession,Keynesians emphasize the need to _______ government spending or _______ taxes,which will cause a multiplier reaction.

Which of the following is not a reason why many economic policies fail?

Which of the following is a monetarist approach to a recession?

The difference between full-employment output and the amount of output demanded at current price levels is equal to the:

According to supply-side policy,the aggregate supply curve should be:

Which of the following is a monetarist solution for a recession?

Which of the following believe that lower tax rates will increase the incentives to work,invest,and produce?

The business cycle is defined as:

Which of the following is true about the U.S.economy during the 1970s?

What does the political business cycle refer to?

What is the extent of the government's power in preventing unemployment and inflation?

Which of the following is not an obstacle to policy success?

During a period of inflation,supply-side economists advocate increasing the marginal tax rate to reduce spending.