In the Current Debate Over Economic Policy,the New Classical Macroeconomists

question 64

Multiple Choice

In the current debate over economic policy,the new classical macroeconomists argue that

• A) the economy is at a full-employment equilibrium when money demand equals aggregate demand.
• B) fiscal policy is effective in stabilizing the economy.
• C) prices are upwardly flexible.
• D) economic instability results primarily from the spending behavior of the private sector.
• E) discretionary monetary and fiscal policies are ineffective in eliminating recessionary and inflationary gaps and may even promote instability.

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Definitions:

Imported Goods

Items brought into a country from another country for sale or use.

State Tariffs

Taxes imposed by state governments on imported goods, which were once a source of revenue and economic policy before being predominantly managed at the federal level in the United States.

Shays's Rebellion

An armed uprising in 1786-1787 in western Massachusetts, led by Daniel Shays, protesting against economic injustices and lack of government response, highlighting the weaknesses of the Articles of Confederation.

Spirit of Liberty

A principle or sentiment that champions freedom and the rights of individuals as paramount, often associated with democratic ideals and patriotic expressions.