I am unsure about the following questions.

1.Which statement is consistent with the Keynesian theory?

A. Short-run economic fluctuations are caused by unstable aggregate demand; therefore, policy instruments should be used to stabilize the economy.

B. Irrational waves of optimism would cause a reduction in aggregate demand and decrease unemployment.

C. Changes in consumer confidence are irrelevant for the economy.

D. Changes in business and consumer expectations generally stabilize the economy.

2.Which statement do opponents of active stabilization policy believe?

A. Fiscal policy is unable to change aggregate demand or aggregate supply.

B. The political process creates lags in the implementation of fiscal policy.

C. A monetary policy designed to offset changes in the unemployment rate is effective.

D. Fluctuations would not exist in the absence of fiscal policies.

3.During recessions, how do automatic stabilizers change government deficit and taxes?

A. Deficit decreases and taxes increase.

B. Both deficit and taxes increase.

C. Both deficit and taxes decrease.

D. Deficit increases and taxes decrease.

4.What is the misery index supposed to measure?

A. the market power of unions

B. the standard of living

C. the degree of inequality

D. the health of the economy

5.Among other things, what determines the long-run average unemployment rate and inflation, respectively?

A. the rate of growth of the money supply; the market power of unions

B. efficiency wages; the money supply growth rate

C. the minimum wage; the extent to which firms are competitive

D. the market power of unions; government spending

6.If policymakers reduce aggregate demand, what happens to inflation and unemployment?

A. Inflation and unemployment rise.

B. Inflation falls, but unemployment rises.

C. Inflation and unemployment fall.

D. Inflation rises, but unemployment falls.

7.Suppose the government decides to decrease the income tax. What is the primary effect of this decision

A. It increases output in the long-run.

B. It decreases the price level in the short-run.

C. It increases inflation in the short-run.

D. decreases unemployment in the long-run.