Advocates of active stabilization policies, in defense of their views, argue that
A. stabilization is less necessary than is commonly advocated by monetarists.
B. discretionary policy in not necessary because automatic stabilizers are sufficient.
C. perfect stabilization is not possible, but moderate improvements in economic performance are possible, such as the response to the events of September 11, 2001.
D. All of these responses are correct.
Answer: C
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There is no difference between government expenditures or outlays and government purchases or spending
a. True b. False Indicate whether the statement is true or false
Why might it be wrong to include self-proclaimed discouraged workers in calculations of the unemployment rate?
A. By definition, discouraged workers are only temporarily laid-off, and they will return to a job shortly. B. Discouraged workers receive federal assistance. C. Discouraged workers are already included in official unemployment statistics as long as no one else in their household is working. D. Discouraged workers likely have a job but are discouraged only because they would like a better-paying job. E. Some discouraged workers are taking advantage of a low-wage period to consume large amounts of leisure.
Exhibit 11-6 Aggregate demand and supply model
In Exhibit 11-6, if the aggregate demand curve is at AD2, the government should:
A. raise taxes to move to AD1. B. not change its policy. C. cut taxes to move to AD3. D. cut spending to move to AD3.
According to the monetarist view and the equation of exchange, which of the following will occur because the Fed sells securities in the open market?
A. A decrease in real interest rates. B. An increase in the price level. C. A lower level of real output. D. A decrease in nominal aggregate spending.