Chap 18

Front 1

Policy tools include

Back 1

Tax policy, government spending, and the availability of money.

Front 2

A tax cut can best be characterized as:

Back 2

Both fiscal and supply-side policy.

Front 3

Fiscal policy includes all of the following except:

Back 3

Interest rate increases.

Front 4

Which of the following does not determine fiscal policy

Back 4

The federal reserve

Front 5

Which of the following policy options would tend to offset each other?

Back 5

An increase in the discount rate and a decrease in the tax rate

Front 6

Which of the following is a monetary policy action?

Back 6

Open market operations

Front 7

The belief that monetary policy can be effective in changing aggregate demand and that interest rates are the critical monetary variable is associated with:

Back 7

Modern Keynsians

Front 8

The belief that monetary policy can be effective in changing aggregate demand and that the money supply is the critical monetary variable is associated with:

Back 8

Monatarists

Front 9

Monetarists believe that:

Back 9

The money supply should be expanded at a steady, predictable rate.

Front 10

The natural rate of unemployment is the

Back 10

Long-term rate determined by structural forces in labor and product markets.

Front 11

Which of the following is an example of supply-side policy

Back 11

Tax incentives for business investment

Front 12

Supply-side policy is designed to:

Back 12

Shift the production possibilities curve outward and shift the aggregate supply curve to the right

Front 13

Which of the following supply-side efforts did the Clinton administration embrace?

Back 13

Additional investment in education and skills training

Front 14

Which of the following supply-side efforts were embraced by the second Bush administration?

Back 14

Reduction in marginal tax rates

Front 15

Which of the following is a Keynesian approach for dealing with a recession?

Back 15

Increase government expenditure

Front 16

In a recession Keynesians emphasize the need to ________ government spending or ________ taxes, which will cause a multiplier reaction.

Back 16

Increase; decrease

Front 17

During a severe recession appropriate economic policy might include:

Back 17

An open market purchase by the Fed, a decrease in the discount rate, or a decrease in government regulation.

Front 18

In a recession, Monetarists believe:

Back 18

Fiscal policy is ineffective.

Front 19

Which of the following is a supply-side policy action to eliminate a recession

Back 19

Increased investment in infrastructure

Front 20

Alternating periods of economic growth and contraction are referred to as:

Back 20

The business cycle

Front 21

Economic forecasts:

Back 21

Drive economic policy for both the Fed and Congress.

Front 22

Which of the following policy obstacles could occur because it is difficult to know how market participants will respond to specific prices?

Back 22

Design problems

Front 23

The time it takes for Congress to deliberate over a specific fiscal policy action is an example of:

Back 23

An implementation problem.

Front 24

Which of the following is the appropriate order of policy responses?

Back 24

Recognition, response design, implementation, and impact