1.The most effective way for the government to develop a surplus as a contractio
ID: 1191435 • Letter: 1
Question
1.The most effective way for the government to develop a surplus as a contractionary measure is to increase taxes and hold or decrease spending.
True or False
2.In the past few decades, the United States has not experienced any extended periods of
a.demand-pull inflation
b.cost-push inflation
c.stagflation
d.deflation
3.The U.S. economy failed to achieve full employment levels of output during the 1960s despite increased government spending
True or False
4.The trade-off between unemployment and inflation is usually shown by the
a.supply curve and the demand curve
b.aggregate expenditure curve
c.production possibilities curve
d.Phillips curve
5.During an inflationary period, the Fed is inclined to purchase government securities to combat inflation.
True or False
6.If government spending is used to bolster the level of economic activity, the type of financing available to the U.S. government that would increase aggregate spending the most is
a.taxation
b.borrowing from the public
c.borrowing from banks
d.printing money
7.During an inflationary period, the Federal Reserve is most likely to
a.lower the discount rate
b.buy government securities
c.lower reserve requirements
d.raise the discount rate
8.Schumpeter’s theory that business cycles are caused by breakthroughs in the form of new products, new machines, or new production techniques is known as the
a.real business cycle theory
b.innovative theory
c,overinvestment theory
d.technology theory
9.The theory of rational expectations is classified as a psychological cause of the business cycle.
True or False
10.Which of the following statements concerning major cycles is incorrect?
a.major cycles are characterized by wide fluctuations in business activity
b.the United States has experienced ten major cycles since World War II
c.severe recessions in major cycles result in widespread unemployment
d.during major cycles, economic activity rises and falls relative to the long-term growth trend
Explanation / Answer
1- True
3- False
4- Phillips Curve
5- False
6- Taxation
7- Raise the Discount rate
8- Real Business Cycle Theory
9- True
10-
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