To Close an Inflationary Gap, the Great Moderation Consensus on Macroeconomics

question 69

Multiple Choice

To close an inflationary gap, the Great Moderation consensus on macroeconomics suggests that:

• A) a close coordination of fiscal and monetary policy is crucial.
• B) the automatic fiscal stabilizers are powerful enough to bring the economy back to equilibrium.
• C) policy makers should wait until a negative productivity shock brings the economy back to equilibrium.
• D) monetary policy should take the leading role in economic stabilization.

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Definitions:

Shares Outstanding

The total number of shares of a corporation that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Mill Rates

The amount of tax payable per dollar of the assessed value of a property, used in calculating local property taxes.

Assessed Value

The dollar value assigned to a property for purposes of taxation by the government.

PST

Provincial Sales Tax, which is a tax levied by individual provinces in Canada.