Question Details

The rationale behind these comments is based on 



1. "He favors a slow recovery, for example, because the natural rate of unemployment may turn out to be higher than anyone thinks." Possible underestimation of the natural rate implies that a recovery should be slow because 
a) a slow recovery is politically more desirable 
b) a fast recovery runs the risk of creating inflation 
c) a slow recovery ensures the employment gains are permanent 
d) a fast recovery cannot decrease unemployment as effectively 
2. "The damnable paradox is that we are also at 'full employment,' or at least at the 'natural rate' of unemployment. This means only that we are at or near the lowest rate to which unemployment can be pushed by expanding demand without ......" Complete this clipping. 
a) requiring higher taxes b) causing higher inflation 
c) lowering interest rates d) increasing the NRU 
3. "Unemployment rates in Canada and the United States are sufficiently low that employers are having difficulty filling many jobs. The point at which red flags go up, economists say, is nine percent in Canada and six percent in the United States." What danger do the red flags signal? 
a) higher taxes b) higher inflation 
c) more discouraged workers d) more encouraged workers 87 
4. "Nor will decrees of one percent cuts in interest rates bring anything but more inflation. Nor yet do grand spending programs 'create' more jobs: they only redistribute them, from industry to industry, from region to region, from private sector to public sector." The rationale behind these comments is based on 
a) the multiplier process b) a vertical long-run Phillips curve 
c) an upward-sloping short-run Phillips curve 
d) a downward-sloping short-run Phillips curve 
5. "The response of the monetary authorities to any hint of inflation is to dampen demand by raising interest rates and slowing economic activity - that is, by causing a recession. It always seems to me that one of the great failures of the economic profession is that the only thing it seems to be able to recommend to eliminate inflation is a recession, but that's the way it is." This clipping reflects the short-run trade-off between 
a) equity and efficiency b) inflation and interest rates 
c) inflation and unemployment d) real and nominal interest rates



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