Which of the following support the idea that monetary policy should be made by a rule?
a. the political business cycle and the time-inconsistency problem
b. the political business cycle but not the time-inconsistency problem
c. the time-inconsistency problem, but not the political business cycle
d. neither the political business cycle nor the time-inconsistency problem
Ans: a. the political business cycle and the time-inconsistency problem
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The benefit of tax deferred savings accounts is_____
a. that it helps avoid some of the double taxation of saving b. that it helps taxpayers avoid bracket creep c. that it increases government tax revenue in the long run d. that it stimulates aggregate demand
Suppose the consumer price index (CPI) for Year X is 130 . This means the average price of goods and services is:
a. currently $130. b. 130 percent more in Year X than in the base year. c. 130 percent more in the base year than in Year X. d. priced at 30 percent more in Year X than in the base year.
When the income multiplier is 3, the marginal propensity to save is
a. 1/(1 + MPC) b. 0.33 c. 1/(1 – MPC) d. 0.66 e. none of the above
Suppose that a national election occurs that generates a feeling of certainty in the market. It is likely that this incident will ________ the level of investment spending.
A. decrease B. not affect C. increase D. neutralize