the economics of money, banking, and financial markets

789 "

© 2014 Pearson Canada Inc."

25.2 How Actively Should Policymakers Try to Stabilize Economic Activity?

1. 
   

   Nonactivists of the policies believe that ____.
   A) wages and prices are very flexible
   B) the self-correcting mechanism is very rapid
   C) government action is unnecessary
   D) all of the above
   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

   
   


2. 
   

   Activists of the policies believe that ____.
   A) the self-correcting mechanism through wage and price adjustment is very slow
   B) wages and prices are sticky
   C) the government needs to pursue active policy to eliminate high unemployment when it
   develops
   D) all of the above
   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

   
   


3. 
   

   If aggregate output is below the natural rate level, activists 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: C
   Diff: 2 Type: MC Page Ref: 610
   Skill: Recall
   Objective List: 25.1 Discern between activist and non-activists views on monetary policy