Question 37 The Federal Reserve generally uses ________ to implement monetary policy. government spending federal tax policy the reserve requirement ratio the discount rate open market operations Question 38 _________ holds that people form expectations on the basis of all available information. The theory behind the Phillips curve Adaptive expectations theory Rational expectations theory Passive monetary theory Monetary neutrality Question 40 The strategic use of monetary policy to _________ is known as active monetary policy. reduce unemployment and increase tax revenue. control inflation and encourage saving. lower interest rates and promote capital investment. counteract macroeconomic expansions and contractions. encourage rational expectations about inflation.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 37

The Federal Reserve generally uses ________ to implement monetary policy.

government spending
federal tax policy
the reserve requirement ratio
the discount rate
open market operations

Question 38
_________ holds that people form expectations on the basis of all available information.
1. The theory behind the Phillips curve
2. Adaptive expectations theory
3. Rational expectations theory
4. Passive monetary theory
5. Monetary neutrality
  
  Question 40
  The strategic use of monetary policy to _________ is known as active monetary policy.
  
  reduce unemployment and increase tax revenue.
  
  control inflation and encourage saving.
  
  lower interest rates and promote capital investment.
  
  counteract macroeconomic expansions and contractions.
  
  encourage rational expectations about inflation.

Definition Definition Relationship between the rate of unemployment and the rate of inflation that shows that the lower the initial rate of unemployment, the greater the rise in wage rate corresponding to a given rise in the rate of unemployment. The Phillips curve assumes that the ratio between prices and nominal wage rates is constant in the short run. Presented graphically, the Phillips curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

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