The Keynesian idea that the government can achieve a specific level of GDP by changing government spending and taxing was

 The Keynesian idea that the government can achieve a specific level of GDP by changing
                            government spending and taxing was known as

a.fine-tuning

b.supply-side stimulation

c.classical manipulation

d.hunting for the Phillips curve

e.crowding out

112.              The Phillips Curve shows the trade-off between

a.unemployment and output

b.inflation and output

c.rates of unemployment and inflation

d.imports and exports

e.unemployment and inflation

113.              Constructing the Phillips curve: __________ is measured on the vertical axis and
                            __________ is measured on the horizontal axis

a.rate of inflation, rate of unemployment

b.level of inflation, level of unemployment

c.nominal GDP, real GDP

d.aggregate demand, aggregate supply

e.percent of automatic stabilization, percent of discretionary stabilization

114.              Unlike Keynesians, neo-Keynesian economists believe that the aggregate supply curve is
                            (drawn from left to right)

a.horizontal

b.vertical

c.vertical, downward sloping, horizontal

d.horizontal, vertical

e.horizontal, upward sloping, vertical

115.              Incorporating the Phillips curve into the aggregate supply curve

a.lengthens the horizontal segment and shortens the vertical

b.lengthens the vertical segment and shortens the horizontal

c.creates an upward-sloping segment after the vertical and before the horizontal
segments

d.creates an upward-sloping segment after the horizontal and before the vertical
segments

e.creates a downward-sloping segment after the horizontal and before the vertical segments

116.              The price and wage controls imposed by President Nixon in 1971

a.effectively eliminated inflationary pressures from the economy

b.merely postponed rising inflation rates, but did not eliminate them

c.intensified 1971 inflation

d.caused real GDP to decline for the first time in eight years

e.curbed inflation but only at the expense of employment, as the Phillips curve would
have predicted

117.              The tradeoffs between rates of employment and inflation during the 1970s and 1980s
                            forced economists to reassess their earlier beliefs about the Phillips curve to conclude that

a.the Phillips curve was upward sloping, not downward sloping as imagined

b.rather than there being one Phillips curve, there is a set of such curves

c.the expected trade-offs did not occur, meaning that policy to lower unemployment
rates would not cause inflation

d.the aggregate supply curve was a horizontal-vertical (two sides of a right angle)
curve, as Keynesians believed

e.the aggregate supply curve actually sloped downward because price levels fell when
real GDP rose

118.              The trade-offs between inflation and unemployment experienced in the 1970s and 1980s
                            indicated to neo-Keynesians that the long-run Phillips curve was

a.horizontal

b.upward sloping

c.downward sloping

d.vertical

e.undefined

119.              For the long run, neo-Keynesians believe that attempts to decrease the unemployment
                            rate will

a.not succeed but will cause the rate of inflation to rise

b.succeed but will also cause the rate of inflation to rise

c.succeed and cause the rate of inflation to fall

d.not succeed but will cause the rate of inflation to fall

e.succeed but only at the expense of real GDP

120.              During the 1970s, countercyclical fiscal policy

a.to spur increases in real GDP failed

b.worked better than predicted, curbing inflation while decreasing unemployment rates

c.demonstrated that the economy could be fine-tuned using aggressive fiscal policy

d.showed that the Keynesian assumption about the shape of the aggregate supply curve
was basically correct

e.failed to lower the unemployment rate and actually increased the inflation rate