Question Details

The missing part of this clipping is best filled by 



1. “This month- slight uptick in the Australian unemployment rate to 4.5 percent shouldn’t be taken too literally. It- probably just a blip. But it- a timely reminder that 99 
unemployment shouldn’t fall much lower. If it does, it won’t be a good sign.” We would not want unemployment to fall much lower because 
a)	resources will be misallocated 
b)	creative destruction will happen 
c)	inflation will develop 
d)	tax receipts will fall 

2. “Policy makers are performing a balancing act, trying to bring inflation down without ..….” This statement is best completed with 
a)	raising taxes 
b)	creating a budget deficit 
c)	creating a recession 
d)	creating deflation 

3. “Unless the economy slows more than the Fed now expects, the central bank might need to ………… sooner rather than later to control inflation.” The missing part of this statement is best filled with 
a)	increase the money supply 
b)	increase interest rates 
c)	increase taxes 
d)	impose price controls 

4. “A Bank of Canada report suggested that wage inflation pressures are increasing, further reducing the odds that the Bank of Canada will follow the lead of the U.S. Federal Reserve and start ……..” This statement is best completed with 
a)	reducing spending 
b)	increasing taxes 
c)	increasing interest rates 
d)	reducing interest rates 

5. “You can’t be the head of the world- most powerful central bank and appear wishy-washy on interest rate policy, even if you really don’t know where that policy is going. You have to project confidence and certainty or the market will get you by ……….. if it perceives you are behind the curve on inflation.” The missing part of this clipping is best filled by 
a)	raising expectations of inflation 
b)	reducing spending 
c)	reducing interest rates 
d)	increasing the money supply 



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