Question 1

In the new Keynesian model, the cost of disinflation due to lower employment depends on

Accepted Answer

A)  the rationality of expectations. 
B)  the flexibility of prices. 
C)  laws regarding unionization. 
D)  all of the above. 
A)  the rationality of expectations. 
B)  the flexibility of prices. 
C)  laws regarding unionization. 
D)  all of the above.

Question 2

In the new classical framework, inflation can be lowered with a credible commitment by monetary policymakers without any decrease in output.

Accepted Answer

A) True 
 B)False

Question 3

If the federal funds rates falls less than expected, then output falls under the

Accepted Answer

A)  new classical model. 
B)  new Keynesian model. 
C)  both of the above. 
D)  none of the above. 
A)  new classical model. 
B)  new Keynesian model. 
C)  both of the above. 
D)  none of the above.

Question 4

The disinflation policies of the early 1980s were not costly due to

Accepted Answer

A)  central bank independence. 
B)  sticky prices. 
C)  high government budget deficits. 
D)  all of the above. 
A)  central bank independence. 
B)  sticky prices. 
C)  high government budget deficits. 
D)  all of the above.

Question 5

Starting from the natural rate, if prices are sticky, anticipated EMP will raise equilibrium output and inflation.

Accepted Answer

A) True 
 B)False

Question 6

The inflationary effect of anticipated EMP is less in the new Keynesian model than in the traditional AS-AD model.

Accepted Answer

A) True 
 B)False

Question 7

Why do new classical economists say that activist policy might be not just ineffective but mistaken?

Accepted Answer

Policymakers must know public

Question 8

Some countries use price indexation, meaning many contracts are adjusted for inflation automatically. How would full indexation of all contracts and agreements affect the effectiveness of EMP?

Accepted Answer

With complete indexa

Question 9

If government spending rises more than anticipated, then equilibrium output should _____ and the equilibrium price level should _____ in the short run.

Accepted Answer

A)  rise, rise 
B)  rise, fall 
C)  fall, rise 
D)  fall, fall 
A)  rise, rise 
B)  rise, fall 
C)  fall, rise 
D)  fall, fall

In the new Keynesian model, the cost of disinflation due to lower employment depends on

In the new classical framework, inflation can be lowered with a credible commitment by monetary policymakers without any decrease in output.

If the federal funds rates falls less than expected, then output falls under the

The disinflation policies of the early 1980s were not costly due to

Starting from the natural rate, if prices are sticky, anticipated EMP will raise equilibrium output and inflation.

The inflationary effect of anticipated EMP is less in the new Keynesian model than in the traditional AS-AD model.

Why do new classical economists say that activist policy might be not just ineffective but mistaken?

Some countries use price indexation, meaning many contracts are adjusted for inflation automatically. How would full indexation of all contracts and agreements affect the effectiveness of EMP?

If government spending rises more than anticipated, then equilibrium output should _ and the equilibrium price level should _ in the short run.

The Financial System

Money

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

Innovation and Structure in Banking and Finance

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm

Is-Lm in Action

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Inflation and Money

Filters

Exam 26: Rational Expectations Redux: Monetary Policy Implications

In the new Keynesian model, the cost of disinflation due to lower employment depends on

In the new classical framework, inflation can be lowered with a credible commitment by monetary policymakers without any decrease in output.

If the federal funds rates falls less than expected, then output falls under the

The disinflation policies of the early 1980s were not costly due to

Starting from the natural rate, if prices are sticky, anticipated EMP will raise equilibrium output and inflation.

The inflationary effect of anticipated EMP is less in the new Keynesian model than in the traditional AS-AD model.

Why do new classical economists say that activist policy might be not just ineffective but mistaken?

Some countries use price indexation, meaning many contracts are adjusted for inflation automatically. How would full indexation of all contracts and agreements affect the effectiveness of EMP?

If government spending rises more than anticipated, then equilibrium output should _____ and the equilibrium price level should _____ in the short run.

The Financial System

Money

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

Innovation and Structure in Banking and Finance

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm

Is-Lm in Action

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Inflation and Money

Filters

If government spending rises more than anticipated, then equilibrium output should _ and the equilibrium price level should _ in the short run.