Advocates of the passive approach to government economic policy believe that the government should ...

Advocates of the passive approach to government economic policy believe that the government should lower tax rates when there is a recessionary gap.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

According to the passive approach, discretionary fiscal or monetary policy can reduce the costs of an unstable economy.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

Advocates of the active approach believe that discretionary government policy can restore economic stability and improve economic performance.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

During the period _____, the short-run Phillips curve for the United States was farthest from the origin.
 a. 1960 to 1964
  b. 1964 to 1969
  c. 1970 to 1973
  d. 1974 to 1983
  e. 1984 to 1989

QUESTION 5

After the 1960s, the short-run Phillips curve based on U.S. economic data:
 a. began shifting inward.
 b. began shifting outward.
 c. did not shift at all.
 d. became virtually horizontal.
  e. became virtually vertical.

QUESTION 6

Current thinking on the Phillips curve suggests that it would be best for policy makers to:
 a. focus on controlling unemployment.
  b. stimulate permanent shifts in aggregate supply.
 c. focus on controlling inflation.
 d. stimulate permanent shifts in aggregate demand.
 e. develop a two-pronged policy to control both unemployment and inflation.

QUESTION 7

In general, the faster inflationary expectations adjust, the:
 a. less macro policy can influence unemployment.
 b. better discretionary policy can be expected to work.
 c. slower the adjustment of the short-run Phillips curve.
  d. stronger the case for active policy.
 e. more effectively a policy can influence unemployment.