Multiple choice answer only.

QUESTION 5 Based on our discussions in class, which from the following list of policies the US government can initiate to improve the US economy would former Minneapolis Federal Reserve President Narayana Kocherlackota likely support: O A wide-spread tariff on foreign made goods to retain and restore jobs in industries that require low and semi-skilled workers. Jobs in these industries have been lost or in decline the last 20 years, due to foreign competition. O Shovel-ready government jobs specifically aimed at putting unemployed low-skilled people back to work. Tuition tax credits and government training programs to retrain unemployed people and individuals that have left the labor market because their skills don't match the kinds of skills firms are looking for in workers. O Retaining the Trump era tax cuts for individuals making over $400,000 to avoid a decrease in AD & possibly AS. Quantitative easing by the Federal Reserve (i.e., QE2), which will lower interest rates and raise Aggregate Demand (AD), thereby increasing output. QUESTION 6 The adverse impact of a negative aggregate demand shock is reduced when the government does not target the government deficit (e.g., by requiring the government run to a balanced budget) because targeting the deficit causes further negative aggregate demand shocks. negative aggregate demand shocks do not affect the deficit not targeting the deficit causes positive aggregate demand shocks. the economy is always producing potential output. The statement is not true. Targeting the deficit is always beneficial, especially when the economy experiences an adverse aggregate demand shock. QUESTION 7 The economist expressed concern about the prospects of short-run economic growth. "Growth in GDP leads to higher inflation - we should be mindful of this and take policy measures to curb that possibility." The economist links short-run growth to either an increase in aggregate demand or an increase in aggregate supply. short-run growth to an increase in people's willingness to work. O short-run growth with a decrease in aggregate demand. short-run economic growth with an increase in aggregate demand O short-run growth with an increase in aggregate supply. QUESTION 8 The ability of the government to stimulate the economy by fiscal spending (increase in G) is limited O if there is a large pool of discouraged workers no longer in the labor force. if wages are fixed above the market -clearing wage, or are sluggish to adjust to changes in the labor market, since people will only want to work more if they are paid more money. O if there is a large pool of unemployed workers. people perceive that the increase in government spending represents a future tax liability and decide to save more now. if the government restricts its spending to domestically produced goods only, rather than goods produced here and abroad