Exam 14: Macroeconomic Policy: Challenges in a Global Economy

In the slow economic recovery following the last financial crisis, which of these was NOT a major concern affecting the U.S. economy?

Which of these is NOT a cost of using fiscal or monetary policy to address a jobless recovery?

(Figure: Determining Long-Run and Short-Run Economic Shifts) Starting at point J, the economy will move to point _____ in the short run if policymakers successfully reduce aggregate demand.

Expectations theories developed by Keynes, Friedman, and Lucas use the same basic concept to describe the formation of expectations.

When the growth in productivity is _____ the rate of change in wages, inflation is _____, and the level of unemployment at that point is _____ the natural rate of unemployment.

Wages above market-clearing rates, intended to improve morale and reduce turnover, are called:

The contribution of the rational expectations theory to the long-run model is the understanding that:

The long-run Phillips curve shows:

Monetized debt occurs when debt is reduced by a fall in the money supply.

The long-run Phillips curve is vertical.

If the rational expectations theory is correct, the Federal Reserve's announced policies will be:

If rational expectations theory is correct, then any increase in aggregate demand caused by announced expansionary policies:

The natural rate of unemployment is the rate at which inflation equals expected inflation, resulting in zero price pressures in the economy.

Adjustable-rate mortgages usually have interest rates lower than market rates during the first year.

Which of these did NOT contribute significantly to the financial crisis of 2008?

Stagflation occurs when rising unemployment is accompanied by rising inflation.

When labor demand rises, unemployment _____ and wages _____.

According to the equation for the Phillips curve, inflation is zero when the increase in nominal wages is _____ the rate of increase in labor productivity.

A shortcoming of the rational expectations hypothesis is that:

Monetized debt results in a decrease in the value of the dollar.