Exam 17: Issues in Macroeconomic Theory and Policy

If inflation is underestimated by decision makers in the economy when it is rising, the SRAS curve will tend to be:

If the economy is fully employed, then the inflationary costs of expansionary policy are likely to be:

Figure 17-A -Refer to Figure 17-1.If an increase in aggregate demand AD₀ to AD₁ is unanticipated, the economy will move from point A to point ____ in the short run.

The use of financial leveraging on mortgage backed securities played a central role in the 2008 financial crisis.

Proponents of the monetary rule believe that a constant growth rate in the money supply will lead to less uncertainty and greater credibility.

A decrease in government purchases or an increase in taxes, other things being equal, will tend to:

A smaller crowding-out effect:

If expectations are rational, can monetary and fiscal policy makers accurately control the effects their policies have on unemployment?

Which of the following is false?

According to the Taylor rule, the Fed should:

Which of the following is false?

A smaller crowding-out effect:

Rational expectation theory implies that accurately anticipated change in aggregate demand:

To what extent should monetary policy be used to fine-tune the economy?

Critics of rational expectation theory believe:

The substantial risks taken by financial intermediaries like Sallie Mae because they are insured are examples of what economists refer to as:

According to the Taylor rule, the Fed should:

A common example of indexing in the United States is:

The Taylor rule is an example of:

Assuming wages are indexed to inflation, if prices rose by 1.4 percent this month and your last month's wage was $1,000, your wage this month would be $1,140.