Tackle the Test: Free-Response Questions

  1. Question

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    What is the consensus view of macroeconomists on each of the following?

    Rubric for FRQ 1 (5 points)

    1 point: Monetary policy can shift aggregate demand in the short run.

    1 point: Monetary policy is ineffective when in a liquidity trap.

    1 point: Fiscal policy can shift aggregate demand.

    1 point: This is not a good idea. Fluctuations in the budget act as an automatic stabilizer for the economy.

    1 point: It is usually counterproductive (for example, due to lags in implementation).

  2. Question

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