the economics of money, banking, and financial markets

790 "

© 2014 Pearson Canada Inc."

4. 
   

   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

   
   


5. 
   

   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

   
   


6. 
   

   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