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A growing number of economists view the Fed's new willingness 



1. "A growing number of economists view the Fed's new willingness to take on more of the nation's debt as inflationary in the long run." This inflation worry is because 
a) the government may tax less b) the debt may become excessive 
c) the government may spend more d) the money supply may increase excessively 
2. "With financial deregulation changing the meaning of money, the Fed finally abandoned the monetarist prescription of targeting the money supply." The monetarist prescription was abandoned due to 
a) unstable velocity b) uncertain Fed control over the money supply 
c) unsatisfactory performance of the monetarist prescription d) all of the above 
3. "It is very difficult for politicians to take action - especially unpleasant action - against a problem until the problem seems compelling. By that time, though, action tends to be tardy. The point of economic management is to stabilize the economy, but a political system that requires signs of instability before it can act makes the process self-defeating." In terms of classic debates over economic policy, what does this argument support? 
a) monetary as opposed to fiscal policy b) fiscal as opposed to monetary policy 
c) policy rules as opposed to discretionary policy 
d) discretionary policy as opposed to policy rules 
4. "Inflationary policies can spur growth for a time, which is why politicians have often found them so tempting. This is the best argument for making central banks ......" Complete this clipping. 52 
a) independent b) subject to regulations 
c) under the control of elected officials d) responsible for economic growth



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