Which of the following models has as its central idea that workers and firms have rational expectations?
A) the new classical model B) the monetarist model
C) the real business cycle model D) the new Keynesian model
A
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The Federal Reserve does not target both the money supply and an interest rate because
A) it would be too confusing to Wall Street and would disrupt the financial markets. B) the Fed cannot achieve a target for both the money supply and an interest rate at the same time. C) it would be illegal according to the Federal Reserve Act. D) it would be too easy for Wall Street to determine what policy the Fed is following and this would destabilize the economy.
Which of the following is an example of active fiscal policy?
a. Income tax revenues rise in an inflationary period. b. Income tax revenues fall in a recession. c. Congress passes a major tax increase in an inflationary period. d. Unemployment benefits increase in a recession.