In the 1980s, U.S. economists acknowledged that it was not possible to exploit the trade-off suggested by the Philips curve of the 1960s. This realization led to more stable macroeconomic policy, which in turn contributed to:
a. more volatility in real output.
b. less volatility in real output.
c. complete removal of unemployment.
d. more volatility in the price level.
e. short business cycles.
b
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Suppose that the government of Smallville spends $2 trillion in 2020 and receives tax revenues of $1.5 trillion in that same year. Which of the following is TRUE?
A. Smallville has a budget deficit of $0.5 trillion. B. Smallville has a trade deficit of $0.5 trillion. C. Smallville has a budget surplus of $0.5 trillion. D. Smallville has a trade surplus of $0.5 trillion.
In the above figure, if the economy is at equilibrium at E1, the Fed would most likely
A. attempt to lower the aggregate demand in the economy. B. adopt an expansionary monetary policy. C. adopt a contractionary monetary policy. D. attempt to lower the price level below 120.
Refer to the information provided in Figure 6.2 below to answer the question(s) that follow.
Figure 6.2Refer to Figure 6.2. Assume Mr. Lingle?s budget constraint is AC. He will have leftover income if he purchases the bundle represented by point
A. A. B. B. C. E. D. D.
Empirical evidence that changes in monetary policy do not cause rapid price adjustments ________
A) is consistent with the Keynesian emphasis on short-run economic fluctuations B) suggests that policymakers need not worry much about inflation C) remains limited and unconvincing D) is consistent with the classical dichotomy E) none of the above