Exam Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Neo-Fisherism says A) the central bank should increase inflation by lowering the money supply. B) the central bank should increase inflation by raising the nominal interest rate. C) the central bank should increase inflation by lowering the real interest rate. D) the central bank should increase inflation by lowering nominal interest rates. E) that Fisherism is wrong.
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2) Business cycles in macroeconomics are A) changes in the average standard of living over time. B) short-run ups and downs in aggregate economic activity. C) profits and losses of firms. D) the economic interrelationships among nations. E) the increase in a nation's productive capacity over a long period of time.
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3) The 2007-8 recession in Canada A) was the most severe recession in the 1961-2018 period. B) was worsened by fiscal policy actions. C) originated in the United States. D) was caused by tight monetary policy. E) was the result of the failure of the Canadian banking system.
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4) When a country has a current account deficit, the country A) always has a large government budget surplus. B) always has a large government budget deficit. C) is always lending abroad. D) is always borrowing from abroad. E) is always borrowing from domestic residents.
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5) Business cycles A) cannot be prevented, according to the consensus among macroeconomists. B) have potentially many causes, but regular comovements. C) occur every five years in Canada. D) have a single cause, and unpredictable comovements. E) are always caused by the central bank.
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6) Tax cuts A) will surely make the government default on its debts. B) cause the government to borrow less. C) may have no effect, if people take account of future taxes. D) cause unemployment. E) always stimulate economic activity.
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