Question 1

Means-tested programs tend to favor

Accepted Answer

A)   those with high income as would a consumption tax.
B)   those with high income while a consumption tax would favor those with low income.
C)   those with low income as would a consumption tax.
D)   those with low income while a consumption tax would favor those with high income.E) B) and C)
F) A) and D)

Question 2

Advocates of cutting taxes rather than increasing government expenditures in response to a recession argue that the increase in spending by consumers and business may be more effective than that of the government.Explain this argument.

Accepted Answer

Households will spend disposable income ...

Question 3

Demand for workers in some industry declines.These workers are reluctant to have a cut in their nominal wage.However,

Accepted Answer

A)   inflation will raise their real wage and so increase the number of available workers.
B)   inflation will raise their real wage and so decrease the number of available workers
C)   inflation will reduce their real wage and so increase the number of available workers.
D)   inflation will reduce their real wage and so decrease the number of available workers.E) A) and B)
F) A) and C)

Question 4

The Federal Open Market Committee meets about

Accepted Answer

A)   every six days.
B)   every six weeks.
C)   every six months.
D)   every sixteen months.E) B) and C)
F) A) and C)

Question 5

Time inconsistency will cause the

Accepted Answer

A)   short-run Phillips curve to be higher than otherwise.
B)   short-run Phillips curve to be lower the otherwise.
C)   long-run Phillips curve to be farther to the right than otherwise.
D)   long-run Phillips curve to be farther left than otherwise.E) C) and D)
F) B) and D)

Question 6

If a central bank were required to target inflation at zero,then when there was a negative aggregate supply shock the central bank

Accepted Answer

A)   would have to increase the money supply.This would move unemployment closer to the natural rate.
B)   would have to increase the money supply.This would move unemployment further from the natural rate.
C)   would have to decrease the money supply.This would move unemployment closer to the natural rate.
D)   would have to decrease the money supply.This would move unemployment further from the natural rate.E) A) and D)
F) A) and C)

Question 7

Suppose there is a decrease in aggregate demand.If the Fed wants to stabilize output it could

Accepted Answer

A)   buy bonds.These purchases also move the price level closer to its original level.
B)   buy bonds.However these purchases move the price level farther from its original level.
C)   sell bonds.These sales also move the price level closer to its original level.
D)   sell bonds.However these sales move the price level farther from its original level.E) B) and D)
F) All of the above

Question 8

Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5 percent per year.The debt created by these continuing deficits is

Accepted Answer

A)   sustainable,but the future burden on your children cannot be offset.
B)   sustainable,and the future burden on your children can be offset if you save for them.
C)   not sustainable,and the future burden on your children cannot be offset.
D)   not sustainable,but the future burden on your children can be offset if you save for them.E) A) and D)
F) A) and C)

Question 9

In which cases were tax cuts followed by robust growth?

Accepted Answer

A)   the ones of the Kennedy administration in 1964 and the ones of the Reagan administration in 1981
B)   the ones of the Kennedy administration in 1964 but not the ones of the Reagan administration in 1981
C)   the ones of the Reagan administration in 1981 but not the ones of the Kennedy administration in 1964
D)   neither the ones of the Kennedy administration in 1964 nor the ones of the Reagan administration in 1981E) A) and B)
F) A) and C)

Question 10

A reduction in the marginal tax-rate includes an income effect that tends to increase savings.

Accepted Answer

A) True 
 B)False

Question 11

Suppose aggregate demand fell.In order to stabilize the economy,the government might

Accepted Answer

A)   increase the money supply.
B)   decrease government expenditures.
C)   increase taxes.
D)   do nothing.E) B) and C)
F) A) and B)

Question 12

Opponents of tax reforms intended to raise saving argue that such reforms

Accepted Answer

A)   favor those with high income,and that saving may not rise because of the substitution effect.
B)   favor those with high income,and that saving may not rise because of the income effect.
C)   favor those with low income,and that saving may not rise because of the substitution effect.
D)   favor those with low income,and that saving may not rise because of the income effect.E) A) and B)
F) None of the above

Question 13

Which of the following are taxed?

Accepted Answer

A)   both corporate profits and dividends paid to stockholders
B)   corporate profits but not dividends paid to stockholders
C)   dividends paid to stockholders but not corporate profits
D)   neither corporate profits nor dividends paid to stock holdersE) B) and C)
F) C) and D)

Exam 36: Six Debates Over Macroeconomic Policy

Time inconsistency will cause the

Correct Answer
verified

Which of the following are taxed?

Correct Answer
verified

Opponents of tax reforms intended to raise saving argue that such reforms

Correct Answer
verified

Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5 percent per year.The debt created by these continuing deficits is

Correct Answer
verified

Suppose there is a decrease in aggregate demand.If the Fed wants to stabilize output it could

Correct Answer
verified

If a central bank were required to target inflation at zero,then when there was a negative aggregate supply shock the central bank

Correct Answer
verified

Means-tested programs tend to favor

Correct Answer
verified

Demand for workers in some industry declines.These workers are reluctant to have a cut in their nominal wage.However,

Correct Answer
verified

The Federal Open Market Committee meets about

Correct Answer
verified

In which cases were tax cuts followed by robust growth?

Correct Answer
verified

A reduction in the marginal tax-rate includes an income effect that tends to increase savings.

Correct Answer
verified

Suppose aggregate demand fell.In order to stabilize the economy,the government might

Correct Answer
verified

Advocates of cutting taxes rather than increasing government expenditures in response to a recession argue that the increase in spending by consumers and business may be more effective than that of the government.Explain this argument.

Correct Answer
verified
Households will spend disposable income ...
View Answer

Exam 36: Six Debates Over Macroeconomic Policy

Time inconsistency will cause the

Correct AnswerverifiedShow Answer

Which of the following are taxed?

Correct AnswerverifiedShow Answer

Opponents of tax reforms intended to raise saving argue that such reforms

Correct AnswerverifiedShow Answer

Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5 percent per year.The debt created by these continuing deficits is

Correct AnswerverifiedShow Answer

Suppose there is a decrease in aggregate demand.If the Fed wants to stabilize output it could

Correct AnswerverifiedShow Answer

If a central bank were required to target inflation at zero,then when there was a negative aggregate supply shock the central bank

Correct AnswerverifiedShow Answer

Means-tested programs tend to favor

Correct AnswerverifiedShow Answer

Demand for workers in some industry declines.These workers are reluctant to have a cut in their nominal wage.However,

Correct AnswerverifiedShow Answer

The Federal Open Market Committee meets about

Correct AnswerverifiedShow Answer

In which cases were tax cuts followed by robust growth?

Correct AnswerverifiedShow Answer

A reduction in the marginal tax-rate includes an income effect that tends to increase savings.

Correct AnswerverifiedShow Answer

Suppose aggregate demand fell.In order to stabilize the economy,the government might

Correct AnswerverifiedShow Answer

Advocates of cutting taxes rather than increasing government expenditures in response to a recession argue that the increase in spending by consumers and business may be more effective than that of the government.Explain this argument.

Correct AnswerverifiedHouseholds will spend disposable income ...View AnswerShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Households will spend disposable income ...
View Answer