The problem with applying monetary policy to the housing bubble affiliated with the recession of 2007–2008 was that the bubble was recognized______.
a. too late to take action
b. so far in advance that the actions taken were excessive
c. in time, but no action was taken
d. in time, but underestimated
a. too late to take action
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According to the new classical macroeconomists, each of the following statements is true EXCEPT:
A) Disinflation will be harder to bring about because of the time-inconsistency problem. B) Policymakers are tempted to deviate from the preannounced policy once the public changes its expectations. C) Feedback rules are preferred to discretionary rules. D) Disinflation will be painless if the restrictive policies announced by the government are credible.
If policy makers desire a $30 increase in output and the consumption function is C = 100 + .75(Y-T), then they must
a. increase government spending by $8. b. increase taxes by $10. c. cut government spending and taxes by $10. d. decrease taxes by $10.