20 true/false (@ 1 pt. for 20 total points)

1. If people who have cancer tend to smoke marijuana more so than other people, then research is likely to show a causation between smoking pot and shortened life expectancies.

2. The authors of the text suggest that the Fed's policy of expansionary monetary policy during the 2001 economic downturn failed to work its way through the transmission mechanism because asymmetric information was high.

3. Both monetary and fiscal policy can cause perpetually rising prices.

4. Policymakers may end up causing inflation due to the lag effects monetary policy has on the economy.

5. A government budget deficit only contributes to inflation if it is paid for by increasing the monetary base.

6. When the Great Depression started and many governments sought to balance their budgets most economists, led by John Maynard Keynes, were arguing that this was the wrong thing to do.

7. Keynesian theory about dealing with the economy is broadly referred to as demand management.

8. The collapse of the Japanese economy in the 1970s is referred to as "the lost decade."

9. Mitt Romney's running mate in the 2012 presidential election, Paul Ryan, is characterized as a follower of the economic theories of Hayek and Friedman.

10. While there are differences between the two schools of thought, both Keynesians and monetarists believe that we should first use fiscal policies to stabilize an economy.

11. One of the differences between Keynesians and Monetarists is over whether "crowding out" is a problem; Keynesians believe it is, Monetarists do not.

12. A key element in the Keynesian story is the "paradox of thrift," where an economy suffers from "too much" saving.

13. Friedman contends that Keynes was a bad influence on the intellectual climate by arguing for government to solve all our problems.