Question 1

A central bank strongly committed to fighting inflation will risk increasing unemployment rather than increasing the money supply.

Accepted Answer

A) True 
 B)False  True

Question 2

Hyperinflation is an inflation rate that exceeds:

Accepted Answer

A)  50 percent inflation per day. 
B)  50 percent inflation per month. 
C)  50 percent deflation per week. 
D)  50 percent inflation per year. 
A)  50 percent inflation per day. 
B)  50 percent inflation per month. 
C)  50 percent deflation per week. 
D)  50 percent inflation per year. B

Question 3

Recall Application 2, "Increased Political Independence for the Bank of England Lowered Inflation Expectations," to
answer the following questions:
-According to the application, the way to measure inflation expectations in England was to compare:

Accepted Answer

A)  nominal GDP growth rates and real GDP growth rates. 
B)  interest rates of inflation adjusted mutual funds and non- inflation adjusted mutual funds. 
C)  interest rates of inflation adjusted stock prices and non- inflation adjusted stock prices. 
D)  interest rates of inflation adjusted bonds and non- inflation adjusted bonds. 
A)  nominal GDP growth rates and real GDP growth rates. 
B)  interest rates of inflation adjusted mutual funds and non- inflation adjusted mutual funds. 
C)  interest rates of inflation adjusted stock prices and non- inflation adjusted stock prices. 
D)  interest rates of inflation adjusted bonds and non- inflation adjusted bonds. D

Question 4

Recall Application 3, "Hyperinflation in Zimbabwe," to answer the following questions: 
-An 8 million percent annual increase in the price level implies that if the price of a basket of goods in June 2007 was $1, then in June 2008, the price of the same basket of goods would be:

Accepted Answer

A)  $8 million. 
B)  $800,000,000. 
C)  $80,000. 
D)  $8,000. 
A)  $8 million. 
B)  $800,000,000. 
C)  $80,000. 
D)  $8,000.

Question 5

An increase in the real GDP can cause inflation.

Accepted Answer

A) True 
 B)False

Question 6

If prices increase by 4 percent and wages increase by 8 percent, the:

Accepted Answer

A)  nominal wage has not changed. 
B)  real wage has increased. 
C)  real wage has not changed. 
D)  nominal wage has increased by 4 percent. 
A)  nominal wage has not changed. 
B)  real wage has increased. 
C)  real wage has not changed. 
D)  nominal wage has increased by 4 percent.

Question 7

From 1992- 1993, the U.S. economy experienced the trade- off between inflation and unemployment described by the Phillips curve.

Accepted Answer

A) True 
 B)False

Question 8

If aggregate demand increases and expectations regarding inflation remain constant:

Accepted Answer

A)  the long- run Phillips curve shifts to the right. 
B)  the economy moves left along the short- run Phillips curve. 
C)  the short- run Phillips curve shifts to the right. 
D)  the short- run Phillips curve shifts to the left. 
A)  the long- run Phillips curve shifts to the right. 
B)  the economy moves left along the short- run Phillips curve. 
C)  the short- run Phillips curve shifts to the right. 
D)  the short- run Phillips curve shifts to the left.

Question 9

If nominal GDP is $700 billion and the money supply is $100 billion, the velocity of money is:

Accepted Answer

A)  7.0. 
B)  3.0. 
C)  0.7. 
D)  3.5. 
A)  7.0. 
B)  3.0. 
C)  0.7. 
D)  3.5.

Question 10

If the money supply is currently $100 million and the government prints another $300 million to finance the budget deficit, then we should expect:

Accepted Answer

A)  a 200 percent inflation rate. 
B)  a 3 percent inflation rate. 
C)  a 200 million percent inflation rate 
D)  a 300 percent inflation rate. 
A)  a 200 percent inflation rate. 
B)  a 3 percent inflation rate. 
C)  a 200 million percent inflation rate 
D)  a 300 percent inflation rate.

Question 11

Recall Application 3, "Hyperinflation in Zimbabwe," to answer the following questions:
-According to the application, if the US$12 lunch equals 1.1 trillion Zimbabwean dollars, then how many Zimbabwean dollars does it take to buy a US dollar?

Accepted Answer

A)  about 917 billion 
B)  about 91.7 billion 
C)  about 917 million 
D)  about 9.17 billion 
A)  about 917 billion 
B)  about 91.7 billion 
C)  about 917 million 
D)  about 9.17 billion

Question 12

Suppose that the money supply is $150 billion and nominal GDP is $600 billion. The velocity of money is:

Accepted Answer

A)  2. 
B)  4. 
C)  3. 
D)  5. 
A)  2. 
B)  4. 
C)  3. 
D)  5.

Question 13

When using rational expectations, all information available to the public will be used.

Accepted Answer

A) True 
 B)False

Question 14

How do expectations impact upon inflation?

Accepted Answer

Expectations can have a significant impa

Question 15

Among developed countries during 1955- 1988, the central banks of Germany and Switzerland experienced the most independence from the government.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following caused the the unemployment rate to rise to over 10 percent in 1983?

Accepted Answer

A)  The increase in the number of illegal immigrants from Central and Latin America. 
B)  The Fed's contractionary response to inflation caused by the oil shocks. 
C)  Increase in tax rates implemented by Ronald Reagan in 1981. 
D)  The change in U.S. labor laws requiring firms to pay unemployment insurance to workers. 
A)  The increase in the number of illegal immigrants from Central and Latin America. 
B)  The Fed's contractionary response to inflation caused by the oil shocks. 
C)  Increase in tax rates implemented by Ronald Reagan in 1981. 
D)  The change in U.S. labor laws requiring firms to pay unemployment insurance to workers.

Question 17

An individual using rational expectations can make unsystematic errors in predicting inflation in the future if some information available is incorrect.

Accepted Answer

A) True 
 B)False

Question 18

Hyperinflation causes inefficiency in the economy because:

Accepted Answer

A)  people spend all their time working. 
B)  people spend all their time hunting for jobs. 
C)  people spend none of their time hunting for bargains. 
D)  people spend all their time hunting for bargains. 
A)  people spend all their time working. 
B)  people spend all their time hunting for jobs. 
C)  people spend none of their time hunting for bargains. 
D)  people spend all their time hunting for bargains.

Question 19

If the actual unemployment rate is above the natural rate, we would expect that:

Accepted Answer

A)  the inflation rate is increasing. 
B)  the inflation rate is zero. 
C)  the inflation rate is constant. 
D)  the inflation rate is decreasing. 
A)  the inflation rate is increasing. 
B)  the inflation rate is zero. 
C)  the inflation rate is constant. 
D)  the inflation rate is decreasing.

Question 20

The Phillips curve depicts a relationship between unemployment and inflation that is:

Accepted Answer

A)  temporary. 
B)  permanent. 
C)  permanent only in the long term. 
D)  long term. 
A)  temporary. 
B)  permanent. 
C)  permanent only in the long term. 
D)  long term.

A central bank strongly committed to fighting inflation will risk increasing unemployment rather than increasing the money supply.

Hyperinflation is an inflation rate that exceeds:

Recall Application 2, "Increased Political Independence for the Bank of England Lowered Inflation Expectations," to answer the following questions: -According to the application, the way to measure inflation expectations in England was to compare:

Recall Application 3, "Hyperinflation in Zimbabwe," to answer the following questions: -An 8 million percent annual increase in the price level implies that if the price of a basket of goods in June 2007 was $1, then in June 2008, the price of the same basket of goods would be:

An increase in the real GDP can cause inflation.

If prices increase by 4 percent and wages increase by 8 percent, the:

From 1992- 1993, the U.S. economy experienced the trade- off between inflation and unemployment described by the Phillips curve.

If aggregate demand increases and expectations regarding inflation remain constant:

If nominal GDP is $700 billion and the money supply is $100 billion, the velocity of money is:

If the money supply is currently $100 million and the government prints another $300 million to finance the budget deficit, then we should expect:

Recall Application 3, "Hyperinflation in Zimbabwe," to answer the following questions: -According to the application, if the US$12 lunch equals 1.1 trillion Zimbabwean dollars, then how many Zimbabwean dollars does it take to buy a US dollar?

Suppose that the money supply is $150 billion and nominal GDP is $600 billion. The velocity of money is:

When using rational expectations, all information available to the public will be used.

How do expectations impact upon inflation?

Among developed countries during 1955- 1988, the central banks of Germany and Switzerland experienced the most independence from the government.

Which of the following caused the the unemployment rate to rise to over 10 percent in 1983?

An individual using rational expectations can make unsystematic errors in predicting inflation in the future if some information available is incorrect.

Hyperinflation causes inefficiency in the economy because:

If the actual unemployment rate is above the natural rate, we would expect that:

The Phillips curve depicts a relationship between unemployment and inflation that is:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 16: The Dynamics of Inflation and Unemployment

A central bank strongly committed to fighting inflation will risk increasing unemployment rather than increasing the money supply.

Hyperinflation is an inflation rate that exceeds:

Recall Application 2, "Increased Political Independence for the Bank of England Lowered Inflation Expectations," to answer the following questions: -According to the application, the way to measure inflation expectations in England was to compare:

Recall Application 3, "Hyperinflation in Zimbabwe," to answer the following questions: -An 8 million percent annual increase in the price level implies that if the price of a basket of goods in June 2007 was $1, then in June 2008, the price of the same basket of goods would be:

An increase in the real GDP can cause inflation.

If prices increase by 4 percent and wages increase by 8 percent, the:

From 1992- 1993, the U.S. economy experienced the trade- off between inflation and unemployment described by the Phillips curve.

If aggregate demand increases and expectations regarding inflation remain constant:

If nominal GDP is $700 billion and the money supply is $100 billion, the velocity of money is:

If the money supply is currently $100 million and the government prints another $300 million to finance the budget deficit, then we should expect:

Recall Application 3, "Hyperinflation in Zimbabwe," to answer the following questions: -According to the application, if the US$12 lunch equals 1.1 trillion Zimbabwean dollars, then how many Zimbabwean dollars does it take to buy a US dollar?

Suppose that the money supply is $150 billion and nominal GDP is $600 billion. The velocity of money is:

When using rational expectations, all information available to the public will be used.

How do expectations impact upon inflation?

Among developed countries during 1955- 1988, the central banks of Germany and Switzerland experienced the most independence from the government.

Which of the following caused the the unemployment rate to rise to over 10 percent in 1983?

An individual using rational expectations can make unsystematic errors in predicting inflation in the future if some information available is incorrect.

Hyperinflation causes inefficiency in the economy because:

If the actual unemployment rate is above the natural rate, we would expect that:

The Phillips curve depicts a relationship between unemployment and inflation that is:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters