QUESTION 11 Economists compare the plight of policy makers to that of a helmsman

Question

QUESTION 11

Economists compare the plight of policy makers to that of a helmsman, the captain of a ship.

True

False

2 points   

QUESTION 12

Which of the following is a true statement?

The term business cycle is misleading in that it implies a regularity in the timing and duration of upswings and downswings, but most economists doubt this regularity.

Whether we are talking about communism or capitalism or every type system in between, the business cycle is ever-present.

Expansions and recessions occur at irregular intervals and last for varying lengths of time.

All of the above.

2 points   

QUESTION 13

Which of the following is a reason the government should not support failing companies?

Moral hazard.

Profit taking.

Bigger economies of scale.

A decrease in leverage.

2 points   

QUESTION 14

The term business cycle is misleading because it implies a regularity in the timing and duration of upswings and downswings.

True

False

2 points   

QUESTION 15

During economic downturns, consumer demand tends to

decline more than incomes decline.

decline less than income declines.

decline by the same amount as incomes decline.

not be effected by the declining economy.

2 points   

QUESTION 16

The foreign sector always has a countercyclical effect on the economy.

True

False

2 points   

QUESTION 17

The foreign sector can have a procyclical effect on the economy due to

foreign wars.

currency imbalances in countries who are our trading partners.

wide swings in the business cycle of other countries.

All of the above.

2 points   

QUESTION 18

Lag effects are sometimes likened to

the problem that a helmsmen has when piloting an oceangoing ship.

a dictator who determines economic policy.

the uncertainty of predicting the weather.

determining the cause and effect of economic events.

2 points   

QUESTION 19

The Humphrey Hawkins Act (the Full-employment and Balanced Growth Act) in 1978 stipulated which of the following goals?

The federal government will take reasonable means to balance the budget.

The federal government will avoid trade surpluses and deficits.

The Board of Governors of the Federal Reserve will establish a monetary policy that maintains long-run growth, minimizes inflation, and promotes price stability.

The Chairman of the Federal Reserve will connect monetary with presidential policy.

All of the above.

2 points   

QUESTION 20

Friedrich Hayek warned that a strict adherence to a centralized plan undermines the virtues of a free society.

True

False

2 points   

The term business cycle is misleading in that it implies a regularity in the timing and duration of upswings and downswings, but most economists doubt this regularity.

Whether we are talking about communism or capitalism or every type system in between, the business cycle is ever-present.

Expansions and recessions occur at irregular intervals and last for varying lengths of time.

All of the above.

Explanation / Answer

11. TRUE.

12. (d) All of the above.

13. (b) Profit taking.

14. TRUE . The term business cycle is misleading because it implies a regularity in the timing and duration of upswings and downswings.

15. (b) decline less than income declines.

16. FALSE because foreign sector also have the pro-cyclical effect on the economy.

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