Fiscal policy was contractionary throughout _____________________.

Reagan's second term and the Clinton administration
all democratic presidencies
the Johnson administration
the Bush administration

Which of the following statements about human capital is true?

Increased on-the-job training increases economic growth.
On-the-job training decreases annual economic growth.
Increasing the average years of education decreases production.
Subsidizing education decreases real GDP growth.

Keynesian activists advocate that when unemployment is below the natural rate _________________.

both contractionary fiscal and monetary policies be adopted
an expansionary monetary policy and a contractionary fiscal policy be adopted
fiscal policy should not be changed
both expansionary fiscal and monetary policies be adopted

Under a fixed-rule policy, when an economy initially at potential GDP suffers a permanent decrease in demand, real GDP will return to potential _________________.

as the money wage rate falls
due to expansionary fiscal and monetary policies
when the government decreases the tax rate
when the central bank increases the rate of money creation

When a feedback-rule policy is used instead of a fixed-rule policy, ___________________.

recessions are shorter
inflationary gaps are permanent
real GDP remains below potential
money wage rates are lower

An economy experiences a permanent decrease in aggregate demand. With a fixed-rule policy, unemployment ________with a feedback-rule policy.

will be the same and inflation will be less than
and inflation will be less than
will be less and inflation will be the same as
and inflation will be greater than

There is less of a chance of a cost-push inflation with ________________.

a fixed-rule policy
an increase in oil prices
an increase in money wage rates
a feedback-rule policy

A surprise inflation reduction results in lower inflation ______________________.

at the expense of higher unemployment
due to a shift of the short-run Phillips curve
and no change in unemployment
and lower unemployment

A credible announced inflation reduction results in lower inflation ________________.

and no change in unemployment
and a movement along the short-run Phillips curve
and lower unemployment
at the expense of higher unemployment

A problem with using feedback-rule policy is that it ___________________.

operates with time lags that extend beyond the forecast horizon
decreases potential GDP
is too slow
works only with supply-side shocks

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