1. Macro Section IV, Review with clickers 15 second timer after I finish reading the question. Wait for the count-down timer before you respond.

2. Consumer confidence drops
Consumer confidence drops. If the government was to use DASK monetary policy it would:
Spend more
Tax more and reduce the deficit
Tax more and increase the deficit
Increase the money supply
Increase interest rate targets

3. Consumer confidence drops
Consumer confidence drops. If the government was to use DASK fiscal policy it would:
Spend more
Tax more and reduce the deficit
Tax more and increase the deficit
Increase the money supply
Increase interest rate targets

4. Investment demand is rising and inflation is increasing
Investment demand is rising and inflation is increasing. If the government was to use DASK monetary policy it would:
Spend more
Tax more and reduce the deficit
Tax more and increase the deficit
Increase the money supply
Increase interest rate targets

5. Investment demand is rising and inflation is increasing
Investment demand is rising and inflation is increasing. If the government was to use DASK fiscal policy it would:
Spend more
Tax more and reduce the deficit
Tax more and increase the deficit
Increase the money supply
Increase interest rate targets

6. Which of the following is not part of a DASK policy?
Stimulate Aggregate Demand during a recession
Stabilize unemployment
Assumes inflation-unemployment trade-off
Follows policy rules
Allowing policy makers to determine the best action

7. Why shouldn’t a government use a DASK policy?
Government can’t act fast enough
Economy doesn’t function as they think it does
Policy doesn’t effect the economy as planned
Discretion leads to manipulation
All the above

8. Which movement would be most undesirable?1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4%
Upward
Downward
To the left
To the right 4% 6% 8%

9. People expect inflation to be 8%, and it really is 8%
People expect inflation to be 8%, and it really is 8%. The economy will be at which point? 1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
A. 2 B. 3 C.4 D. 5 E. 6

10. People expect inflation to be 12%, and it really is 8%
People expect inflation to be 12%, and it really is 8%. The economy will be at which point? 1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
A. 2 B. 3 C.4 D. 5 E. 6

11. People expect inflation to be 12%, and it really is 8%
People expect inflation to be 12%, and it really is 8%. Unemployment will be? 1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
A. 4% B. 6% C.8% D. More than 8%

12. Inflation is 4% and people expect it
Inflation is 4% and people expect it. The Fed increases inflation which surprises people. The economy would head towards? 1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
A. 2 B. 3 C.4 D. 5 E. 6

13. Inflation is 4% and people expect it
Inflation is 4% and people expect it. The Fed increases inflation which people expect. The economy would head towards? 1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
A. 2 B. 3 C.4 D. 5 E. 6

14. The economy moves from point 6 to point 3. This supports this concept:1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation

15. The economy moves from point 6 to point 4. This supports this concept:1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation

16. This change represents a tighter monetary policy which surprises people1 2
12% 5 3 4 8%
ExI =12% 7 6 4%
ExI =8%
ExI =4% 4% 6% 8%
2 to 1
2 to 3
2 to 4
2 to 5

17. Original Keynesian Theory supported which concept?
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

18. During the 1950’s, higher inflation was found to be correlated with lower unemployment. This supports this concept:
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

19. During the 1960’s, the government engineered higher inflation
During the 1960’s, the government engineered higher inflation. Unemployment fell. This supports this concept:
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

20. A single downward sloping Phillips Curve suggests
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

21. The Long Run Vertical Phillips Curve suggests
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

22. This might be the most notable and unexpected macroeconomic phenomenon of the 1970’s.
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

23. In 1982, the government reduced inflation rapidly
In 1982, the government reduced inflation rapidly. The unemployment rate rose. This supports which concept:
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

24. The economic experiences of the 1950’s, 60’s, 70’s and 80’s suggest this concept is true:
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

25. Government policy activists necessarily believe in this
Money Neutrality
Inflation-Unemployment Trade-off
Stagflation
Multiple Phillips Curves

26. The next set of questions uses the following answers
Delays or Lags
Unintended Consequences
Mistakes

27. As the government runs a deficit, crowding out occurs
Delays or Lags
Unintended Consequences
Mistakes

28. A inflationary bias occurs
Delays or Lags
Unintended Consequences
Mistakes

29. Delays or Lags Unintended Consequences Mistakes
The Political Cycle
Delays or Lags
Unintended Consequences
Mistakes

30. Delays or Lags Unintended Consequences Mistakes
The government debates spending cuts for several years as the economy recovers
Delays or Lags
Unintended Consequences
Mistakes

31. Delays or Lags Unintended Consequences Mistakes
People expect the Fed’s new loose money policy which results in higher inflation and no effect on unemployment
Delays or Lags
Unintended Consequences
Mistakes

32. The recession is supply driven and not Keynesian Demand driven
Delays or Lags
Unintended Consequences
Mistakes

33. Delays or Lags Unintended Consequences Mistakes
The government provides tax cuts to pharmaceutical companies who provide large campaign contributions
Delays or Lags
Unintended Consequences
Mistakes