. 6) Which of the following is a reason to support active stabilization policy? a) policy affects the economy with a lag. b) policy can offset shocks to the economy. c) policy takes time to have an impact on the economy. d) policy does not have an ability to affect unemployment. 7) An example of an automatic stabilizer is a) more people receive food stamps during a recession. b) fewer people collect unemployment benefits during an expansion. c) during a recession, people move down into lower tax brackets. d) all of the above are examples. 8) It is difficult to verify the Lucas Critique. Which of the following is a reason why? a) It is hard to identify shocks in the economy. b) It is hard to know how the economy would be different without implemented policies. c) both a) and b) are reasons. d) neither a) nor b) are reasons. 9) Which of the following is an example of the time inconsistency problem? a) monetary policy vows to fight inflation and dramatically increases the money supply. b) President promises not to raise taxes but does so in order to balance the budget. c) the Euro area requires limited budget deficits of members but when country's fail to comply they do not enforce required punitive actions. d) all of the above are examples of the time inconsistency problem. nhould odiuot bu
. 6) Which of the following is a reason to support active stabilization policy? a) policy affects the economy with a lag. b) policy can offset shocks to the economy. c) policy takes time to have an impact on the economy. d) policy does not have an ability to affect unemployment. 7) An example of an automatic stabilizer is a) more people receive food stamps during a recession. b) fewer people collect unemployment benefits during an expansion. c) during a recession, people move down into lower tax brackets. d) all of the above are examples. 8) It is difficult to verify the Lucas Critique. Which of the following is a reason why? a) It is hard to identify shocks in the economy. b) It is hard to know how the economy would be different without implemented policies. c) both a) and b) are reasons. d) neither a) nor b) are reasons. 9) Which of the following is an example of the time inconsistency problem? a) monetary policy vows to fight inflation and dramatically increases the money supply. b) President promises not to raise taxes but does so in order to balance the budget. c) the Euro area requires limited budget deficits of members but when country's fail to comply they do not enforce required punitive actions. d) all of the above are examples of the time inconsistency problem. nhould odiuot bu
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:6) Which of the following is a reason to support active stabilization policy?
a) policy affects the economy with a lag.
b) policy can offset shocks to the economy.
c) policy takes time to have an impact on the economy.
d) policy does not have an ability to affect unemployment.
7) An example of an automatic stabilizer is
a) more people receive food stamps during a recession.
b) fewer people collect unemployment benefits during an expansion.
c) during a recession, people move down into lower tax brackets.
d) all of the above are examples.
8) It is difficult to verify the Lucas Critique. Which of the following is a reason why?
a) It is hard to identify shocks in the economy.
b) It is hard to know how the economy would be different without implemented policies.
c) both a) and b) are reasons.
d) neither a) nor b) are reasons.
9) Which of the following is an example of the time inconsistency problem?
a) monetary policy vows to fight inflation and dramatically increases the money supply.
b) President promises not to raise taxes but does so in order to balance the budget.
c) the Euro area requires limited budget deficits of members but when country's fail to
comply they do not enforce required punitive actions.
d) all of the above are examples of the time inconsistency problem.
10) In order to correct for inflation when looking at the deficit we should adjust by
a) adding inflation to the nominal deficit.
b) subtracting inflation from the nominal deficit.
c) adding the national debt to the nominal deficit.
d) subtracting inflation squared and adding back the nominal deficit.
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