Refer to Table 16-4. Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy
If Congress and the president use fiscal policy successfully to keep real GDP at its potential level in 2017, which of the following will be lower than if Congress and the president had taken no action?
A) real GDP and potential GDP B) potential GDP and the inflation rate
C) real GDP and the inflation rate D) real GDP and the unemployment rate
C
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How does the text distinguish between the market and government?
A) The market is based on competition; the government is based on cooperation. B) The market is based on prices; the government is based on policies. C) The market is based on individualism; the government is based on socialism. D) In all of the above ways. E) In none of the above ways.
Which of the following would make a reasonable hypothesis to test?
A) Rising inflation is bad for the U.S. economy. B) An inflation rate above 4% is dangerous for the British economy. C) As interest rates increase, eventually the inflation rate will decline. D) Increases in inflation are worse for the U.S. economy than are increases in public sector borrowing.
Which of the following is not a weakness of fiscal policy as a tool of economic stabilization? a. It is ineffective in dealing with stagflation
b. Its correct implementation depends on an accurate estimate of potential output. c. It is subject to lags. d. It affects only aggregate demand but does not have any impact on aggregate supply. e. Households may not respond to changes they perceive as permanent.
Comparing the European and the U.S. central bank systems, the Executive Board of the European system resembles:
A. the Board of Governors. B. the FOMC. C. the Presidents of the regional Federal Reserve Banks. D. the Chairman of the Board of Governors of the Fed.