The Great Moderation Consensus Regarding the Use of Monetary or Fiscal

question 88

Multiple Choice

The Great Moderation consensus regarding the use of monetary or fiscal policy to reduce unemployment in the long run is that:

• A) unemployment can be constantly decreased as long as expectations of inflation are kept low.
• B) the natural rate of unemployment limits what monetary and fiscal policy can accomplish.
• C) the concept of the nonaccelerating inflation rate of unemployment, or NAIRU, was a mistake.
• D) the only effective policy is to maintain a constant growth rate of the money supply.

---

Definitions:

Total Product

The total quantity of output that a firm produces, usually within a given time period.

Marginal Product

The additional output produced as a result of using one extra unit of a particular input.

Average Product

Average Product is the output produced, on average, by each unit of a variable factor of production, such as labor, calculated by dividing total product by the number of variable input units used in production.

Total Product

The total quantity of output produced by a firm for a given quantity of inputs over a specified period.