question
Policy tools to influence the macroeconomy include
answer
Tax policy, government spending, and the availability of money.
question
Income taxes are an automatic stabilizer because when income falls, ceteris paribus, tax receipts
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Fall because taxes are computed on the basis of income.
question
The natural rate of unemployment is the
answer
Long-term rate determined by structural forces in labor and product markets.
question
Which of the following groups believe that lower tax rates will increase the incentives to work, invest, and produce?
answer
Supply-siders.
question
During a severe recession, appropriate economic policy might include
answer
An open market purchase by the Fed, a decrease in the discount rate, or a decrease in government regulation.
question
Which of the following is an accurate statement concerning the macroeconomy of the United States?
answer
The economy continues to experience the ups and downs of the business cycle.
question
A growth recession is characterized by
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A positive growth rate below 3 percent annually.
question
If the data collected by policy makers overstate inflation, this is an example of
answer
A measurement problem.
question
Which of the following is not true about macroeconomic models?
answer
They tend to agree with each other about how the economy works.
question
The fact that the president must ask Congress for the authority to cut taxes is an example of
answer
An implementation problem.
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