Economists who favor activist monetary policy often argue that
A) during the mid-1970s, money supply growth rates were nearly constant and still the economy went through a recession.
B) during the mid-1970s, activist monetary policy was applied and the economy was healthy and stable.
C) activist monetary policy is inflexible and this is one of its virtues; the money supply doesn't change every year in response to political considerations.
D) activist monetary policy is likely to be destabilizing most of the time, but still it is the better way to proceed.
A
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________ believed that economic downturns would generally reverse themselves quickly without policy intervention.
A. Neither Keynes nor the classical macroeconomic theorists B. Keynes C. Classical macroeconomic theorists D. Both Keynes and the classical macroeconomic theorists
In recent years unemployment rates in several European countries have been higher than unemployment rates in the United States. Many economists believe that European unemployment rates have been higher because
A) European firms hire many seasonal workers from other countries, and this tends to inflate unemployment rates in their countries. B) of the different methods used to measure unemployment. If similar methods were used, unemployment rates in Europe and the United States would be about the same. C) the size of the military is much larger in the United States and all military personnel are classified as employed. D) unemployment benefits are more generous in Europe than in the United States.
When supply for an item is perfectly inelastic, how does the supply change when there is a steep drop in price?
a. increases b. decreases c. does not change d. is eliminated
Which of the following would be considered a fiscal policy action?
A) The Fed increases the money supply. B) Tax incentives are offered to encourage the purchase of fuel efficient cars. C) Spending on the war in Afghanistan is increased to promote homeland security. D) A tax cut is designed to stimulate spending during a recession.