Question 16 If rapid inflation occurs in a relatively full employment economy, w

Question

Question 16

If rapid inflation occurs in a relatively full employment economy, well-coordinated monetary and fiscal policies would involve:

Question 17

A country is experiencing inflation, and the government is considering restricting aggregate private demand by either (1) increasing personal income tax rates, or (2) introducing a very tight monetary policy. If the government wishes to minimize the negative effect of its anti-inflationary policies on economic growth it should adopt:

Question 22

Which of the following monetary policies would be most effective in combating inflation.<br>

Which of the following monetary policies would be most effective in combating inflation.

Question 23

Inflation will be more difficult for the monetary authorities to contain if most people expect a rapidly changing price level, because:

Question 24

If people's expectations about price level changes enter into their economic decisions, which of the following monetary policies would be most likely to promote price stability?

Question 25

Using the equation GDP = C + I + G + (Exports - Imports), if the US economy is at full employment, with widespread inflation, an increase in its exports and a decrease in its imports would tend to:

Question 26

Assume that between 1992 and 2002 the GDP in a certain economy increases from $1 trillion to $2 trillion, while the GDP price index increases from 100 to 200. how much is GDP in 2002 stated in terms of 1992 dollars?

Question 27

"The gap between actual and potential output for this year is estimated to by 6 percent to 7 percent of potential output. Wholesale prices are virutally unchanged from one year ago. Unemployment is 8.8 percent of the civilian work force, the same level as three months ago."
Which of the following stabilization policies would be the most appropriate?

Question 28

In a period of sluggish growth, there is a debate on whether to stimulate the economy by means of a tax cut or an increase in public expenditures. In the short run, a tax cut, as opposed to an increase in government spending, is:

Question 30

"On the whole, statistics show that the velocity of money is high when the interest rate is high." Which of the following best explains this relationship?

Explanation / Answer

16) B

17) C

22) A

23) D

24) A

25) C

26) B

27) A

28) C

30) C

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