Chapter 36, Problem 4MCQ

To determine

The correct option which is the main source of disagreement among macroeconomists

Answer to Problem 4MCQ

From the available options, the correct option is the Fed conducted the appropriate amount of quantitative easing during the Great Recession.

Explanation of Solution

If central bank will be independent which get prevention or covers political pressure then there would not be any disagreement among macroeconomists as bank is performing independently. It is the government who make adjustments in fiscal policy such as change in tax rates which means macroeconomists cannot disagree with this source. Monetary policy is controlled by federal reserve where no macroeconomists can discord or make different opinions. It is normal when deficits cause high inflation after Great Recession because of decrease in revenue and increase in credit which means this option is not correct for disagreement among macroeconomists. But if during the Great Recession, the Fed carried out the right level of quantitative easing then there will be a debate or disagreements between macroeconomists as the appropriate level cannot be same for each macroeconomist.

Therefore, the correct option is a (the Fed conducted the appropriate amount of quantitative easing during the Great Recession) and all other options are incorrect.

Economics Concept Introduction

Introduction: Macroeconomics is the branch of entire economics that focuses on wide area of general economic issues that are related or interacted with economies. Great recession was the time period from 2007 to 2009 when general economy was declined and GDP was adjusted for inflation.