Question 1

What factor does NOT help to explain the recent phenomenon of a jobless recovery?

Accepted Answer

A)  a rapid increase in productivity 
B)  greater reliance on temporary and part-time workers 
C)  outsourcing 
D)  higher levels of government stimulus spending 
A)  a rapid increase in productivity 
B)  greater reliance on temporary and part-time workers 
C)  outsourcing 
D)  higher levels of government stimulus spending

Question 2

The Phillips curve tradeoff worsened in the 1970s because of:

Accepted Answer

A)  oil shocks. 
B)  aggressive unions. 
C)  environmental concerns. 
D)  the Watergate scandal. 
A)  oil shocks. 
B)  aggressive unions. 
C)  environmental concerns. 
D)  the Watergate scandal.

Question 3

Which of these is(are) true regarding the rational expectations theory? I. In general, studies support the policy ineffectiveness proposition.
II) Labor markets are often exhibit short-term wage stickiness.
III) It does not make the best use of all publicly available information.

Accepted Answer

A)  I only 
B)  II only 
C)  III only 
D)  I, II, and III only 
A)  I only 
B)  II only 
C)  III only 
D)  I, II, and III only

Question 4

Most economists agree that expansionary fiscal policy is not effective in addressing a jobless recovery.

Accepted Answer

A) True 
 B)False

Question 5

Increased outsourcing by U.S. companies has contributed to the jobless recovery after the 2007-2009 recession.

Accepted Answer

A) True 
 B)False

Question 6

The Phillips curve of the 1960s for the United States:

Accepted Answer

A)  showed stagflation in the U.S. economy. 
B)  suggested to policymakers that they could keep unemployment low by accepting moderate inflation. 
C)  indicated that to keep unemployment low, policymakers had to accept double-digit rates of inflation. 
D)  was nearly a vertical line. 
A)  showed stagflation in the U.S. economy. 
B)  suggested to policymakers that they could keep unemployment low by accepting moderate inflation. 
C)  indicated that to keep unemployment low, policymakers had to accept double-digit rates of inflation. 
D)  was nearly a vertical line.

Question 7

Banks had an incentive to originate subprime mortgages because they could collect origination fees and then sell the mortgage.

Accepted Answer

A) True 
 B)False

Question 8

At the natural rate of unemployment, inflationary pressures are nonexistent.

Accepted Answer

A) True 
 B)False

Question 9

Country X is practicing expansionary monetary policy. This helps improve its trade balance.

Accepted Answer

A) True 
 B)False

Question 10

In the aftermath of a recession, firms are more likely to add overtime shifts than hire permanent workers when the demand for their product increases.

Accepted Answer

A) True 
 B)False

Question 11

For developed countries like the United States and Japan, the increased pace of globalization has brought increased competition for resources.

Accepted Answer

A) True 
 B)False

Question 12

The recession of 2007-2009 probably lasted longer than other postwar recessions because it was associated with a bank-centered financial crisis.

Accepted Answer

A) True 
 B)False

Question 13

The cost of financing U.S. government debt would be lower if foreigners decided to hold fewer U.S. dollars.

Accepted Answer

A) True 
 B)False

Question 14

Jane claims that the inflation rate next year will decrease because the Federal Reserve has announced an intention to increase the federal funds rate. Which theorist would be vindicated by this behavior?

Accepted Answer

A)  Milton Friedman 
B)  Robert Lucas 
C)  John Maynard Keynes 
D)  Thorstein Veblen 
A)  Milton Friedman 
B)  Robert Lucas 
C)  John Maynard Keynes 
D)  Thorstein Veblen

Question 15

According to the Phillips curve, a rise in inflation would correspond to _____ while a rise in unemployment would correspond to _____.

Accepted Answer

A)  an increase in unemployment; an increase in inflation 
B)  a decrease in unemployment; an increase in inflation 
C)  an increase in unemployment; a decrease in inflation 
D)  a decrease in unemployment; a decrease in inflation 
A)  an increase in unemployment; an increase in inflation 
B)  a decrease in unemployment; an increase in inflation 
C)  an increase in unemployment; a decrease in inflation 
D)  a decrease in unemployment; a decrease in inflation

Question 16

(Figure: Understanding Phillips Curves) What is the expected inflation rate associated with Phillips curve PCa?

Accepted Answer

A)  0% 
B)  3% 
C)  4% 
D)  5% 
A)  0% 
B)  3% 
C)  4% 
D)  5%

Question 17

Rational expectations theory suggests that the Federal Reserve and other policymakers must fool the public if their policies are to have short-term effects.

Accepted Answer

A) True 
 B)False

Question 18

Expansionary monetary policy leads to inflation and is therefore not an appropriate policy for addressing a jobless recovery.

Accepted Answer

A) True 
 B)False

Question 19

Robert Lucas argued that:

Accepted Answer

A)  workers and employers would adjust to macroeconomic inflationary policies designed to increase employment and thereby negate the policies. 
B)  the opportunity cost of macroeconomic policies was always negative. 
C)  workers were more important than employers in determining macroeconomic policy. 
D)  macroeconomic policy would work only with a three-year lag. 
A)  workers and employers would adjust to macroeconomic inflationary policies designed to increase employment and thereby negate the policies. 
B)  the opportunity cost of macroeconomic policies was always negative. 
C)  workers were more important than employers in determining macroeconomic policy. 
D)  macroeconomic policy would work only with a three-year lag.

Question 20

Stagflation is the simultaneous occurrence of _____ unemployment and _____ inflation.

Accepted Answer

A)  rising; rising 
B)  rising; falling 
C)  falling; rising 
D)  falling; falling 
A)  rising; rising 
B)  rising; falling 
C)  falling; rising 
D)  falling; falling

What factor does NOT help to explain the recent phenomenon of a jobless recovery?

The Phillips curve tradeoff worsened in the 1970s because of:

Which of these is(are) true regarding the rational expectations theory? I. In general, studies support the policy ineffectiveness proposition. II) Labor markets are often exhibit short-term wage stickiness. III) It does not make the best use of all publicly available information.

Most economists agree that expansionary fiscal policy is not effective in addressing a jobless recovery.

Increased outsourcing by U.S. companies has contributed to the jobless recovery after the 2007-2009 recession.

The Phillips curve of the 1960s for the United States:

Banks had an incentive to originate subprime mortgages because they could collect origination fees and then sell the mortgage.

At the natural rate of unemployment, inflationary pressures are nonexistent.

Country X is practicing expansionary monetary policy. This helps improve its trade balance.

In the aftermath of a recession, firms are more likely to add overtime shifts than hire permanent workers when the demand for their product increases.

For developed countries like the United States and Japan, the increased pace of globalization has brought increased competition for resources.

The recession of 2007-2009 probably lasted longer than other postwar recessions because it was associated with a bank-centered financial crisis.

The cost of financing U.S. government debt would be lower if foreigners decided to hold fewer U.S. dollars.

Jane claims that the inflation rate next year will decrease because the Federal Reserve has announced an intention to increase the federal funds rate. Which theorist would be vindicated by this behavior?

According to the Phillips curve, a rise in inflation would correspond to _ while a rise in unemployment would correspond to _.

(Figure: Understanding Phillips Curves) What is the expected inflation rate associated with Phillips curve PC_a?

Rational expectations theory suggests that the Federal Reserve and other policymakers must fool the public if their policies are to have short-term effects.

Expansionary monetary policy leads to inflation and is therefore not an appropriate policy for addressing a jobless recovery.

Robert Lucas argued that:

Stagflation is the simultaneous occurrence of _ unemployment and _ inflation.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

International Trade

Open Economy Macroeconomics

Filters

Exam 14: Macroeconomic Policy: Challenges in a Global Economy

What factor does NOT help to explain the recent phenomenon of a jobless recovery?

The Phillips curve tradeoff worsened in the 1970s because of:

Which of these is(are) true regarding the rational expectations theory? I. In general, studies support the policy ineffectiveness proposition. II) Labor markets are often exhibit short-term wage stickiness. III) It does not make the best use of all publicly available information.

Most economists agree that expansionary fiscal policy is not effective in addressing a jobless recovery.

Increased outsourcing by U.S. companies has contributed to the jobless recovery after the 2007-2009 recession.

The Phillips curve of the 1960s for the United States:

Banks had an incentive to originate subprime mortgages because they could collect origination fees and then sell the mortgage.

At the natural rate of unemployment, inflationary pressures are nonexistent.

Country X is practicing expansionary monetary policy. This helps improve its trade balance.

In the aftermath of a recession, firms are more likely to add overtime shifts than hire permanent workers when the demand for their product increases.

For developed countries like the United States and Japan, the increased pace of globalization has brought increased competition for resources.

The recession of 2007-2009 probably lasted longer than other postwar recessions because it was associated with a bank-centered financial crisis.

The cost of financing U.S. government debt would be lower if foreigners decided to hold fewer U.S. dollars.

Jane claims that the inflation rate next year will decrease because the Federal Reserve has announced an intention to increase the federal funds rate. Which theorist would be vindicated by this behavior?

According to the Phillips curve, a rise in inflation would correspond to _____ while a rise in unemployment would correspond to _____.

(Figure: Understanding Phillips Curves) What is the expected inflation rate associated with Phillips curve PCa?

Rational expectations theory suggests that the Federal Reserve and other policymakers must fool the public if their policies are to have short-term effects.

Expansionary monetary policy leads to inflation and is therefore not an appropriate policy for addressing a jobless recovery.

Robert Lucas argued that:

Stagflation is the simultaneous occurrence of _____ unemployment and _____ inflation.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

International Trade

Open Economy Macroeconomics

Filters

According to the Phillips curve, a rise in inflation would correspond to _ while a rise in unemployment would correspond to _.

(Figure: Understanding Phillips Curves) What is the expected inflation rate associated with Phillips curve PC_a?

Stagflation is the simultaneous occurrence of _ unemployment and _ inflation.