790 "
© 2014 Pearson Canada Inc."
If aggregate output is below the natural rate level, nonactivists of policies would recommend
that the government ____.
A) do nothing
B) try to eliminate the high unemployment by attempting to shift the aggregate supply curve to
the right
C) try to eliminate the high unemployment by attempting to shift the aggregate demand curve to
the right
D) try to eliminate the high unemployment by attempting to shift the aggregate demand curve to
the left
Answer: A
Diff: 2 Type: MC Page Ref: 610
Skill: Recall
Objective List: 25.1 Discern between activist and non-activists views on monetary policy
Nonactivists of policies contend that a policy of shifting the aggregate ____ curve will be
costly because it produces ____ volatility in both the price level and output.
A) supply; less
B) supply; more
C) demand; less
D) demand; more
Answer: D
Diff: 2 Type: MC Page Ref: 610
Skill: Recall
Objective List: 25.1 Discern between activist and non-activists views on monetary policy
The existence of lags prevents the instantaneous adjustment of the economy to policies
changing aggregate demand, thereby strengthening the case for ____.
A) supply-side policy
B) nonactivists
C) activists
D) demand-management policy
Answer: B
Diff: 2 Type: MC Page Ref: 610
Skill: Recall
Objective List: 25.1 Discern between activist and non-activists views on monetary policy