Question 1

When the IS curve is drawn with the nominal interest rate on the vertical axis, a reduction in the expected inflation rate will cause:

Accepted Answer

A)  the IS curve to become flatter. 
B)  no change in the IS curve. 
C)  the IS curve to shift rightward. 
D)  the IS curve to become steeper. 
E)  the IS curve to shift leftward. 
A)  the IS curve to become flatter. 
B)  no change in the IS curve. 
C)  the IS curve to shift rightward. 
D)  the IS curve to become steeper. 
E)  the IS curve to shift leftward.

Question 2

In the medium run, which of the following expressions will represent the nominal interest rate?

Accepted Answer

A)  rn. 
B)  gY+ gm. 
C)  rn - ne. 
D)  rn + gm. 
E)  rn + nT. 
A)  rn. 
B)  gY+ gm. 
C)  rn - ne. 
D)  rn + gm. 
E)  rn + nT.

Question 3

Suppose the central bank pursues expansionary monetary policy. Such an action will cause:

Accepted Answer

A)  the natural real interest rate to rise. 
B)  the natural real interest rate to fall. 
C)  ambiguous effects on the natural real interest rate. 
D)  no effect on the natural real interest rate. 
E)  the natural real interest rate falls when the nominal rate falls. 
A)  the natural real interest rate to rise. 
B)  the natural real interest rate to fall. 
C)  ambiguous effects on the natural real interest rate. 
D)  no effect on the natural real interest rate. 
E)  the natural real interest rate falls when the nominal rate falls.

Question 4

Suppose the central bank engages in contractionary monetary policy that results in lower money growth. This lower money growth will cause which of the following in the short run?

Accepted Answer

A)  Lower real interest rates and lower nominal interest rates. 
B)  Lower real interest rates and higher nominal interest rates. 
C)  Higher real interest rates and higher nominal interest rates. 
D)  Higher real interest rates and lower nominal interest rates. 
E)  No change in either nominal or real interest rates. 
A)  Lower real interest rates and lower nominal interest rates. 
B)  Lower real interest rates and higher nominal interest rates. 
C)  Higher real interest rates and higher nominal interest rates. 
D)  Higher real interest rates and lower nominal interest rates. 
E)  No change in either nominal or real interest rates.

Question 5

When individuals make decisions about how much money and bonds to hold, which of the following variables will portfolio holders consider?

Accepted Answer

A)  The nominal interest rate only. 
B)  The expected inflation rate only. 
C)  Both the nominal and real interest rates. 
D)  The real interest rate only. 
E)  Either the real interest rate or the expected inflation rate. 
A)  The nominal interest rate only. 
B)  The expected inflation rate only. 
C)  Both the nominal and real interest rates. 
D)  The real interest rate only. 
E)  Either the real interest rate or the expected inflation rate.

When the IS curve is drawn with the nominal interest rate on the vertical axis, a reduction in the expected inflation rate will cause:

In the medium run, which of the following expressions will represent the nominal interest rate?

Suppose the central bank pursues expansionary monetary policy. Such an action will cause:

Suppose the central bank engages in contractionary monetary policy that results in lower money growth. This lower money growth will cause which of the following in the short run?

When individuals make decisions about how much money and bonds to hold, which of the following variables will portfolio holders consider?

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Markets: the Islm Model

The Labour Market

Putting All Markets Together: the Asad Model

The Phillips Curve, the Natural Rate of Unemployment and Inflation

The Crisis

The Facts of Growth

Saving, Capital Accumulation and Output

Technological Progress and Growth

Technological Progress: the Short, the Medium and the Long Run

Financial Markets and Expectations

Expectations, Consumption and Investment

Expectations, Output and Policy

Openness in Goods and Financial Markets

The Goods Market

Output, the Interest Rate and the Exchange Rate

Exchange Rate Regimes

Should Policy-Makers Be Restrained

Fiscal Policy: a Summing up

Monetary Policy: a Summing up

Epilogue: the Story of Macroeconomics

Filters

Exam 14: Expectations: the Basic Tools

When the IS curve is drawn with the nominal interest rate on the vertical axis, a reduction in the expected inflation rate will cause:

In the medium run, which of the following expressions will represent the nominal interest rate?

Suppose the central bank pursues expansionary monetary policy. Such an action will cause:

Suppose the central bank engages in contractionary monetary policy that results in lower money growth. This lower money growth will cause which of the following in the short run?

When individuals make decisions about how much money and bonds to hold, which of the following variables will portfolio holders consider?

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Markets: the Islm Model

The Labour Market

Putting All Markets Together: the Asad Model

The Phillips Curve, the Natural Rate of Unemployment and Inflation

The Crisis

The Facts of Growth

Saving, Capital Accumulation and Output

Technological Progress and Growth

Technological Progress: the Short, the Medium and the Long Run

Financial Markets and Expectations

Expectations, Consumption and Investment

Expectations, Output and Policy

Openness in Goods and Financial Markets

The Goods Market

Output, the Interest Rate and the Exchange Rate

Exchange Rate Regimes

Should Policy-Makers Be Restrained

Fiscal Policy: a Summing up

Monetary Policy: a Summing up

Epilogue: the Story of Macroeconomics

Filters