Exam 18: Events and Ideas

Real business cycle theory suggests the business cycle is caused by:

Monetary policy:

Supply-side economics is the belief that tax cuts can be used to stimulate long-run economic growth.

Rational expectations theory suggests that people and firms base their expectations on:

Which of the following is FALSE? Keynesian economics:

A policy of expansionary austerity involves increasing government spending to increase private-sector confidence, leading to an increase in output and employment.

The real business cycle theorists say that changes in total factor productivity are totally the result of:

The belief that individuals and firms make their decisions optimally using all available information:

In A Monetary History of the United States, 1867-1960, Milton Friedman and Anna Schwartz argued that:

The General Theory of Employment, Interest, and Money, written by _____ and published in _____, transformed the way economists thought about macroeconomics.

The period of relative calm in the economy between 1985 and 2007 is called the Great Moderation.

Some economists believe that fluctuations in the growth rate of total factor productivity cause business cycles.

Reduction of interest rates was ineffective in fighting the Great Recession because:

Which of the following is FALSE? At the time of the Great Depression:

The period of relative calm in the economy between 1985 and 2007 is called the:

At the time of the Great Depression, there was:

The Great Moderation consensus is that discretionary fiscal policy can be destabilizing because of lags in adjusting policy.

Classical economists believe that:

Which view of macroeconomics holds that a decrease in the money supply will reduce inflationary pressure?

The Great Moderation consensus agreement that a decrease in the interest rate was the best policy for fighting a recession was ineffective in the Great Recession because: