Exam 18: Events and Ideas

The belief that government spending will crowd out private spending is part of:

Nearly all economists agree that increases in government spending can _____ aggregate _____.

A policy implication of monetarism is that:

Discretionary fiscal policy may be counterproductive because:

The Great Moderation consensus in macroeconomics is that:

The main ideas of Keynesian economics are the importance of the _____ and emphasis on _____.

Cutting government spending to increase private-sector confidence, leading to increases in output and employment, is called:

According to Keynes, changes in "animal spirits" will affect actual output through changes in:

Classical economic theory describes agricultural economies fairly well because:

Proponents of rational expectations believe that:

When the Fed pursues a policy of quantitative easing, it:

The _____ hypothesis is that macroeconomic policy should be used to stabilize the economy rather than to permanently decrease the unemployment rate.

The Great Moderation consensus among macroeconomists is that fiscal policy should be used sparingly because:

Milton Friedman's argument was that the Fed should follow a monetary policy rule so that the money supply would:

In the 1970s and first half of the 1980s the U.S. economy had low inflation and low unemployment.

The theory of rational expectations states that:

Under which conditions do some macroeconomists believe the natural rate hypothesis does NOT work?

During the 1960s and 1970s, most monetarists believed that the velocity of money:

The Great Moderation consensus among macroeconomists is described by all of the following EXCEPT that:

Use of activist fiscal and monetary policy can bring rapid growth, as was the case in the United States before the 1972 election. One consequence of an activist policy is: