Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain

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Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.

a. There is so much uncertainty about the effects of monetary policy that we would be better off not using it.

b. Depending on the model used, a one percentage point reduction in the policy interest rate is estimated to increase output growth in the year of the interest rate cut by as little as 0. 1 percentage point.

c. Depending on the model used, a one percentage point reduction in the policy interest rate is estimated to increase output growth in the year of the interest rate cut by as much as 2. 1 percentage points.

d. Elect a Democrat as president if you want low unemployment.

e. There is clear evidence of political business cycles in the United States: low unemployment during election campaigns and higher unemployment the rest of the time.

f. Fiscal spending rules in the United States have been ineffective in reducing budget deficits.

g. Balanced budget rules in Europe have been effective in constraining budget deficits.
h. Governments would be wise to announce a no-negotiation policy with hostage takers.
i. If hostages are taken, it is clearly better for governments to negotiate with hostage takers, even if the government has announced a no-negotiation policy.
j. There is some evidence that countries with more independent central banks have generally lower inflation.
k. In a "starve-the-beast" fiscal policy, spending cuts come before tax cuts.

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Macroeconomics

ISBN: 9780133780581

7th Edition

Authors: Olivier Jean Blanchard

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