Exam 17: Macro Policy Debate: Active or Passive

According to the rational expectations school,if the Fed announces a policy of rapid growth in the money supply,but then puts the brakes on money expansion without any announcement,the short-run result is likely to be

For an economy to eliminate inflation once people have begun to anticipate inflation,

If an economist who favors a passive approach observes a drop in real GDP caused by a decrease in aggregate demand,she is most likely to think that

If an active approach to policy is followed,how would an expansionary gap eventually close?

The initial Phillips curve relationship implied that the opportunity cost of __________ __________ was higher __________.

During the period __________,the short-run Phillips curve for the United States was farthest from the origin.

To say that the Fed has some independence means that it

According to the rational expectations school,when monetary policy makers do exactly what is expected of them,their efforts to stimulate the economy will have no effect either on output or employment.

According to a recent study of central banks around the world,

A credible policy designed to lower inflation must throw the economy into recession.

Those who favor a passive approach to policy think that all of the following conditions will allow the economy to bring itself out of a recessionary gap except one.Which is the exception?

Policy makers may not know that the economy is in a recession until six months after the recession starts; this is a phenomenon known as the

The natural rate hypothesis states that in the long run,

If a passive approach to policy was followed,how would an expansionary gap eventually close?

Opponents of inflation targets say that

The inflation associated with the oil embargoes of the 1970s illustrated the __________ of the downward-sloping Phillips curve in the long run,as unemployment __________.

For those who favor an active approach,public policy changes are necessary to cure a recessionary gap because

The inflation associated with the oil embargoes of the 1970s resulted in

Unemployment cannot be maintained below the natural rate,no matter what inflation rate is tolerated.

Which of the following pieces of information is not necessary for active policy to work successfully?