Question 1

The Lucas supply function,in combination with the assumption that expectations are rational,implies that

Accepted Answer

A) anticipated policy changes have a significant effect on real output. 
B) unanticipated policy changes have no effect on real output. 
C) anticipated policy changes have no effect on real output. 
D) the effect that policy changes have on real output is the same,regardless of whether those changes are anticipated or not.

Question 2

The Economic Recovery Tax Act of 1981 cut corporate taxes in a way that was designed to

Accepted Answer

A) encourage firms to hire more workers. 
B) stimulate capital investment. 
C) encourage firms to use fewer nonrenewable resources. 
D) reduce corporate profits.

Question 3

It is difficult to empirically test alternative macroeconomic models against one another because

Accepted Answer

A) macroeconomic models do not predict the same outcomes from policies. 
B) macroeconomic models differ in ways that are hard to standardize for. 
C) macroeconomic models cannot be expressed in mathematical terms. 
D) macroeconomic models are always expressed in scientific terms.

Question 4

Most monetarists advocate an activist monetary stabilization policy.

Accepted Answer

A) True 
 B)False

Question 5

Many economists challenged the idea of passive government involvement in the economy following the inflation of the 1970s and early 1980s,and the recessions of 1974-1975 and 1980-1982.

Accepted Answer

A) True 
 B)False

Question 6

The rational-expectations hypothesis suggests that the forecasts that people make concerning future inflation rates

Accepted Answer

A) are always correct. 
B) consistently overestimate the actual rate of inflation in the future. 
C) are correct on average,but are subject to errors that are distributed randomly. 
D) consistently underestimate the actual rate of inflation in the future.

Question 7

The rational-expectations hypothesis implies that there is no need for government stabilization policies.

Accepted Answer

A) True 
 B)False

Exam 18: Alternative Views in Macroeconomics

The Lucas supply function,in combination with the assumption that expectations are rational,implies that

The Economic Recovery Tax Act of 1981 cut corporate taxes in a way that was designed to

It is difficult to empirically test alternative macroeconomic models against one another because

Most monetarists advocate an activist monetary stabilization policy.

Many economists challenged the idea of passive government involvement in the economy following the inflation of the 1970s and early 1980s,and the recessions of 1974-1975 and 1980-1982.

The rational-expectations hypothesis suggests that the forecasts that people make concerning future inflation rates

The rational-expectations hypothesis implies that there is no need for government stabilization policies.