Exam 34: Inflation, Deflation, and Macro Policy

Economists who accept the quantity theory of money favor a monetary rule because they believe the short-run effects of monetary policy are unpredictable and the long-run effects are on the price level, not real output.

In an unexpected inflation, lenders will generally:

Economists before the 1940s were most likely to call a rise in asset prices inflation, as long as it is accompanied by an increase in:

Refer to the graph shown. Suppose an economy begins at point B but then adopts a contractionary monetary policy. In the short run, this policy would most likely:

Which of the following statements is consistent with the quantity theory of money?

Governments usually accept goods inflation as long as it stays low, which for the United States currently means around:

Inflationary pressures increase when the economy moves:

In which case will adaptive, extrapolative and rational expectations predict the same inflation rate in the coming year?

Consider the following Phillips curve diagram: For the case where the economy is at Point A,Point B,or Point C,explain: (a)whether actual inflation is above or below expected inflation (What is each exactly?) (b)the likely shift in the short-run Phillips curve (c)the likely change in unemployment

Asset inflation:

Asset inflation is when:

One reason goods inflation is preferred by policymakers is that it:

Is zero inflation better than 2% inflation?

Globalization in the past decade has led to a(n):

Based on the long-run Phillips curve, we can conclude that expected inflation plays:

Because inflation undermines money's unit of account function, government policy will try to keep it:

In a hyperinflation, the economy:

Over the last 20 years, the United States experienced periods of considerable:

Using the equation of exchange,describe the difference between economists who ascribe to the quantity theory and those who follow a more institutionally-focused theory of inflation.

The quantity theory of money: