Consider the Following Events: Event 1: Growth in the World

question 77

Multiple Choice

Consider the following events: Event 1: Growth in the world economy slows.
Event 2: The world price of oil rises.
Event 3: Canadian labour productivity declines.
Choose the statement that is correct.

• A)A classical macroeconomist and a monetarist recommend that taxes be kept low to avoid disincentive effects for all of the events and a Keynesian recommends active fiscal policy and monetary policy to offset all events.
• B)All macroeconomists believe that the economy requires active fiscal policy and monetary policy to keep the economy out of recession.
• C)A classical macroeconomist and a monetarist recommend an increase in the quantity of money for all events.
• D)A Keynesian recommends no action for all of the events.
• E)A Keynesian recommends active fiscal policy but not monetary policy for events 1 and 2 and monetary policy but not fiscal policy for event 3.

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