Believers in fixed rules maintain that
a. with accurate forecasts, we can see inflation coming at least one year ahead of time.
b. the length of stabilization lags is not important because fiscal policy actions are taken quickly and the economy feels the effect on aggregate demand quickly.
c. we should forget about discretionary policy and put the economy on autopilot, relying instead on automatic stabilizers and the economy's self-correcting mechanism.
d. the economy's self-correcting mechanism is slow and not very reliable, even with automatic stabilizers.
c
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Foreign investors may wish to purchase U.S. assets for all of the following reasons except one. Which is the exception?
a. The rate of return on assets is higher in the United States than in other countries. b. They may wish to diversify their portfolios. c. The United States may be regarded as a relatively safer place in which to invest. d. Governments of most other industrialized countries actively discourage foreign investment. e. With their increased foreign debt burdens, investment in developing countries has become less attractive.
Menu costs refers to
a. resources used by people to maintain lower money holdings when inflation is high. b. resources used to price shop during times of high inflation. c. the distortion in incentives created by inflation when taxes do not adjust for inflation. d. the cost of more frequent price changes induced by higher inflation.
Which of the following does NOT contribute directly to the persistence of structural unemployment
What will be an ideal response?
Graphically, an increase in demand is represented by
A. an upward movement (from right to left) along a given demand curve. B. an outward shift of the demand curve. C. an inward shift of the demand curve. D. a downward movement (from left to right) along a given demand curve.