In 1979, Fed Chair Paul Volcker
a. instituted an accommodative monetary policy to address adverse supply shocks.
b. believed that inflation had not yet reached unacceptable levels.
c. believed decreasing inflation would temporarily decrease output growth.
d. All of the above are correct.
c
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What three factors that were critical to economic prosperity did Adam Smith observe, and later publish in The Wealth of Nations?
What will be an ideal response?
Neoclassical growth theory is based on the proposition that real GDP per person grows when
A) the population growth rate increases. B) the population growth rate decreases. C) technological advances occur. D) saving decreases.
Activists-believe that AD is unstable because
A) business and consumer attitudes and expectations shift. B) monetary policy is variable. C) fiscal policy effects are unpredictable. D) Both B and C are correct.
How does hedging affect the flow of funds in the financial system?
A) It reduces it since it is a sign that investors do not like risk. B) It reduces it because it increases risk by encouraging speculation. C) It increases it because it reduces risk thus encouraging more people to make financial investments. D) It increases it by encouraging more speculation.