Exam 17: Macro Policy Debate: Active or Passive

Exhibit 16-2 -In Exhibit 16-2,the aggregate demand in the economy is represented by AD₁ and the short run aggregate supply by SRAS₁₁₀.If a passive policy approach is used,the economy will move from its current short-run equilibrium to point _____.

To favor a passive approach to policy is to believe that the private sector is

According to the rational expectations model,the only time active policy has an impact on aggregate output is when

There is little or no evidence that countries experience less inflation when their central banks are free from political pressures.

Which of the following would eliminate the time inconsistency problem?

Exhibit 16-4 -In Exhibit 16-4,if the economy started near point b,and government purchases increased,we would expect the economy in the short run to move to

In the event of a recession,which of the following is the most likely policy stance of those who advocate a passive approach to economic policy?

Exhibit 16-3 -According to those who favor a passive approach to policy,how will the economy shown in Exhibit 16-3 attain equilibrium at potential output?

The __________ lag is typically longer for fiscal policy than monetary policy.

The time it takes for the Fed's purchase of government securities to ultimately change aggregate demand is called the

Exhibit 16-2 -In Exhibit 16-2,the aggregate demand in the economy is represented by AD₀ and the short run aggregate supply by SRAS₁₂₀.Which of the following represents the short-run equilibrium in the economy?

An economy that self-corrects a recessionary gap will experience falling nominal wages,rising real wages and falling output.

Exhibit 16-2 -In Exhibit 16-2,the aggregate demand in the economy is represented by AD₀ and the short run aggregate supply by SRAS₁₁₀.Which of the following represents the long-run equilibrium in the economy?

A passive approach to economic policy calls for the government to do nothing to offset unemployment because of

If inflationary expectations increase,we can infer that

Exhibit 16-1 -According to those who favor a passive approach to policy,how will the economy shown in Exhibit 16-1 attain equilibrium at potential output?

Exhibit 16-4 -In Exhibit 16-4,the most desirable of the points shown is

If resource owners anticipated a monetary growth rate of 6 percent,but the money supply actually grew at only 2 percent,

According to the rational expectations school,when the economy is operating at the potential output level,a temporary decrease in unemployment is possible through appropriate monetary policy--but only if workers and employers are aware in advance of the Fed's intentions.

Exhibit 16-2 -In Exhibit 16-2,the aggregate demand in the economy is represented by AD₀ and the short run aggregate supply by SRAS₁₂₀.If a passive policy is followed to eliminate the recessionary gap,the economy will move from its current short-run equilibrium to point _____.