Question 1

The main purpose of the Laffer curve is to crudely suggest

Accepted Answer

A)  how government can increase tax revenues by increasing tax rates.
B)  that a tax cut will lead to an increase in GDP.
C)  the disincentive effects of high marginal tax rates.
D)  the tax rate which will yield maximum revenue for the government.E) A) and B)
F) A) and C)

Question 2

The most challenging task assigned to conventional monetary and fiscal policies is

Accepted Answer

A)  fighting inflationary recessions.
B)  fighting depressions.
C)  fighting runaway inflation.
D)  lowering our foreign trade deficit.E) A) and D)
F) A) and C)

Question 3

________ recessions pose major macropolicy dilemmas.

Accepted Answer

The answer of ________ recessions pose major macropolicy dilemmas....

Question 4

Which of the main economic schools of thought would believe that the government should undertake a tax policy stressing work and investment incentives?

Accepted Answer

A)  Rational expectations
B)  Classical
C)  Supply-side
D)  Keynesian
E)  MonetaristF) All of the above
G) B) and D)

Question 5

The quantity theory of money originated under

Accepted Answer

A)  classical economics.
B)  Keynesian economics.
C)  monetarism.
D)  supply-side economics.
E)  the rational expectationists.F) B) and D)
G) B) and E)

Question 6

According to the quantity theorists,the reason for inflation is ________.

Accepted Answer

money supp...

Question 7

Statement I: Economic Behaviorists challenge the idea that rational behavior and economic self-interest are the only factors motivating economic behavior.
Statement II: The classical economists and the rational expectationists believe that wages are downwardly flexible.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) All of the above
F) A) and B)

Question 8

If tax rates are cut,one might expect to observe an increase in the budget deficit.Supply-siders question this observation,arguing that

Accepted Answer

A)  this is a price that must be paid for a more equitable tax system.
B)  when taxes are cut,expenditures must also be cut.
C)  a decrease in the tax rate may actually generate an increase in tax revenues.
D)  tax wedges will make up the difference.
E)  taxes should not be cut;transfer payments should be increased.F) None of the above
G) D) and E)

Question 9

Monetarism begins and ends with one obsession: ________________.

Accepted Answer

the rate o...

Question 10

Proponents of the monetarist approach to economic stabilization think that the growth of the money supply should be approximately equal to

Accepted Answer

A)  the prime rate.
B)  the long-term average growth of real output.
C)  the real interest rate.
D)  the growth of federal expenditures.
E)  the growth of the federal budget.F) A) and B)
G) B) and E)

Question 11

The ________ economists would have the government do absolutely nothing during a period of relatively high unemployment.

Accepted Answer

The answer of The ________ economists would have the government...

Question 12

The way to get people to work more,say the supply-siders,is to __________________.

Accepted Answer

lower marg...

Question 13

Statement I: To fight inflation,slow the rate of monetary growth.
Statement II: To fight inflation,raise the deficit.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) C) and D)
F) B) and C)

Question 14

The monetarists think that the growth of the money supply should be approximately equal to the growth of ___________.

Accepted Answer

the econom...

Question 15

If M were 500 and V were 8,how much would PQ be?

Accepted Answer

The answer of If M were 500 and V were...

Question 16

The theory of rational expectations concludes that

Accepted Answer

A)  since expectations can cause discretionary stabilization policies to be pro-cyclical,it is better to rely upon policy rules.
B)  discretionary monetary policy is a more powerful stabilization device than is discretionary fiscal policy.
C)  discretionary fiscal policy is a more powerful stabilization device than is discretionary monetary policy.
D)  discretionary policies are more effective than rules in stabilizing the economy.E) A) and B)
F) None of the above

Question 17

The quantity theory of money is based on the equation of _____.

Accepted Answer

The answer of The quantity theory of money is based...

Question 18

-Which tax revenue given here will be generated by two different tax rates?

Accepted Answer

A)  F
B)  G
C)  H
D)  I
E)  JF) A) and B)
G) B) and D)

Question 19

According to the monetarists

Accepted Answer

A)  the supply of money changes in response to changes in the levels of real output and prices.
B)  changes in the velocity of money are more important than changes in the money supply in causing the level of economic activity to change.
C)  an expansionary fiscal policy will lower interest rates and thereby tend to over stimulate investment and consumption.
D)  changes in the money supply are the primary cause of changes in the price level.E) A) and D)
F) None of the above

Question 20

Which school is the most opposed to government countercyclical intervention?

Accepted Answer

A)  The Keynesians
B)  The monetarists
C)  The supply-siders
D)  The new classical economistsE) B) and D)
F) All of the above

Exam 15: A Century of Economic Theory

The theory of rational expectations concludes that

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According to the quantity theorists,the reason for inflation is ________.

Correct Answerverifiedmoney supp...View AnswerShow Answer

Which school is the most opposed to government countercyclical intervention?

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-Which tax revenue given here will be generated by two different tax rates?

Correct AnswerverifiedShow Answer

The most challenging task assigned to conventional monetary and fiscal policies is

Correct AnswerverifiedShow Answer

The monetarists think that the growth of the money supply should be approximately equal to the growth of ___________.

Correct Answerverifiedthe econom...View AnswerShow Answer

If tax rates are cut,one might expect to observe an increase in the budget deficit.Supply-siders question this observation,arguing that

Correct AnswerverifiedShow Answer

The quantity theory of money is based on the equation of _____.

Correct AnswerverifiedShow Answer

Statement I: To fight inflation,slow the rate of monetary growth. Statement II: To fight inflation,raise the deficit.

Correct AnswerverifiedShow Answer

Monetarism begins and ends with one obsession: ________________.

Correct Answerverifiedthe rate o...View AnswerShow Answer

If M were 500 and V were 8,how much would PQ be?

Correct AnswerverifiedShow Answer

The main purpose of the Laffer curve is to crudely suggest

Correct AnswerverifiedShow Answer

The way to get people to work more,say the supply-siders,is to __________________.

Correct Answerverifiedlower marg...View AnswerShow Answer

Which of the main economic schools of thought would believe that the government should undertake a tax policy stressing work and investment incentives?

Correct AnswerverifiedShow Answer

The ________ economists would have the government do absolutely nothing during a period of relatively high unemployment.

Correct AnswerverifiedShow Answer

Statement I: Economic Behaviorists challenge the idea that rational behavior and economic self-interest are the only factors motivating economic behavior. Statement II: The classical economists and the rational expectationists believe that wages are downwardly flexible.

Correct AnswerverifiedShow Answer

The quantity theory of money originated under

Correct AnswerverifiedShow Answer

Proponents of the monetarist approach to economic stabilization think that the growth of the money supply should be approximately equal to

Correct AnswerverifiedShow Answer

________ recessions pose major macropolicy dilemmas.

Correct AnswerverifiedShow Answer

According to the monetarists

Correct AnswerverifiedShow Answer

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the econom...
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the rate o...
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lower marg...
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