Evaluate the following statements. Which of the following is/are true? (i) Advocates of active policy believe that the central bank should adjust its policy rate whenever the economy is cooling down or heating up. (ii) Advocates of passive policy believe that the government should increase government spending when aggregate demand contracts. (iii) Advocates of passive policy believe that policymakers should "lean against the wind" in response to fluctuations in output. O a. Only (iii) O b. Only (1) O c. O d. Only (ii) and (iii) Only (i) and (iii)

Evaluate the following statements. Which of the following is/are true? (i) Advocates of active policy believe that the central bank should adjust its policy rate whenever the economy is cooling down or heating up. (ii) Advocates of passive policy believe that the government should increase government spending when aggregate demand contracts. (iii) Advocates of passive policy believe that policymakers should "lean against the wind" in response to fluctuations in output. O a. Only (iii) O b. Only (1) O c. O d. Only (ii) and (iii) Only (i) and (iii)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume the following macroeconomic conditions in the United States and that US policy makers desire to achieve their three macro-policy goals defined in the usual way. A. Output has risen above potential output, creating a large positive output gap. B. The employment rate has risen, creating an unemployment rate of 3%. C. The inflation rate has risen to 8% per year. Which statement is CORRECT? O Output is too high; the unemployment rate is too low; and the inflation rate is too high. Output is too high; the employment rate is too low; and the inflation rate is too low. Output is too high; the employment rate is too low; and the inflation rate is too high. Output is too low; the unemployment rate is too low; and the inflation rate is too high. Output is too high; the unemployment rate is too low; and inflation rate is too low.
An increase in government regulation would cause aggregate: supply to shift to the left. demand to shift to the right. demand to shift to the left. O supply to shift to the right.
QUESTION 36 What determines tax revenues? O a. The level of national income. O b. The income tax rate. O c. The money supply in the economy. O d. Both (a) and (b).
QUESTION 28 What is explained by accelerator theory? O a. The way in which a small injection leads to a greater increase in GDP O b. The way in which unemployment today depresses aggregate demand in future, creating more unemployment O c. The way in which current inflation leads to greater future price rises O d. The way a small change in national income leads to a greater increase in investment
Each of the following is a determinant of demand except O a. lastes. O b. expectations. Oc production technology. O d. the prices of related goods. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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Which of the following statements about institutions is incorrect? O a. The implied covenant of good faith and fair dealing in contract law is part of an institution. O D. The authority on family issues that a society confers to the elders is not considered part of the society's institutions. O C. Institutions are the humanly devised constraints that shape economic, political, and social interaction. O d. Laws and regulations that specify what constitutes market manipulation in the financial market are part of a country's economic institutions. O e. The extent to which people in a society are willing to entertain ideas and debates that contradict their own existing beliefs is considered social norms and informal institutions.
Which of the following is incorrect about the outcome of the cost of expected inflation? Select one: O a. It results in unfair tax treatments. O b. It does not result in relative price distortions. O c. It increases menu costs. O d. It increases shoe leather cost. Which of the following statements best apply to the closed economy model? Select one: O a. An increase in labour results in an increase in output. O b. The interest rate adjusts to equilibrate demand and supply. O c. Reducing taxes is the best option for increasing income. O d. The government uses fiscal policy to regulate the economy. Complete the statement below. Classical dichotomy Select one: O a. distinguishes between money and inflation. O b. makes the distinction between money demand and money supply. O c. makes a distinction between real and nominal variables. O d. isolates the real interest rate and real GDP
The proponents of the hysteresis hypothesis argue that: (i) the short-run and the long-run developments of the economy can be studied separately. (ii) the fluctuations in aggregate demand affect output and employment only in the short run. (iii) negative shocks to aggregate demand can reduce the natural level of output and employment. O a. Only (i) and (iii) b. Only (iii) O c. Only (i) and (ii) O d. Only (ii)
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