Exam 17: Macroeconomics: Events and Ideas

Keynes argued that the surest way to bring the economy out of the Great Depression was to:

Discretionary fiscal policy may destabilize the economy because of lags in implementing policy and lags in the effect of fiscal policy on the economy.

Which school of thought believes that expansionary monetary policy affects only prices,not output? I.classical macroeconomics II.Great Moderation consensus

According to Keynes,the remedy for a recessionary gap was straightforward.The solution was to:

Classical economists point out that:

Keynes believed that wages and prices were sticky.Therefore,a rightward shift of the aggregate demand curve would cause a(n):

Keynesian theory argued that monetary policy could be very effective during a depression.

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

The Keynesian school of thought is that expansionary monetary policy has very little or no effect on output.

Which statement is TRUE of the state of modern macroeconomics?

The main consequence of Keynesian economics is:

According to the natural rate hypothesis,attempts to keep unemployment below the natural rate will lead to increasing inflation.

Classical economics is based primarily on the works of John Maynard Keynes.

Keynes suggested that money is:

Monetary policy:

The Great Moderation consensus includes the idea that the central bank should be independent of politics.

The Great Moderation consensus regarding the use of monetary or fiscal policy to reduce unemployment in the long run is that:

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

Some Keynesian economists believed that at the cost of some inflation,the government could reduce the unemployment rate to a permanently low rate.

Which argument was a justification for breaking with the normal presumption against using discretionary fiscal policy during the Great Recession?