The Great Moderation Consensus About Macroeconomic Policy Is That Monetary

question 110

Multiple Choice

The Great Moderation consensus about macroeconomic policy is that monetary policy:

• A) is effective.
• B) can reduce the unemployment rate below the natural rate.
• C) makes the economy unstable.
• D) should follow a policy rule.

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Definitions:

Consumption

The use of goods and services by households, involving the purchasing and utilization of commodities to satisfy needs and wants.

Specific Tax

A fixed amount imposed by the government on a product, service, or activity.

Price Elasticity

A measure that shows how much the quantity demanded of a good responds to a change in the price of that good.

Tax Borne

Refers to the entity (consumers, producers, or others) that ultimately pays the economic cost of a tax, regardless of who the tax is initially levied upon.