Question 1

According to the natural-rate hypothesis, output will be at the natural rate:

Accepted Answer

A) if inflation exceeds expected inflation. 
B) if inflation falls below expected inflation. 
C) in the long run. 
D) if aggregate demand affects output in the long run. 
A) if inflation exceeds expected inflation. 
B) if inflation falls below expected inflation. 
C) in the long run. 
D) if aggregate demand affects output in the long run.

Question 2

According to the natural-rate hypothesis, fluctuations in aggregate demand affect output in:

Accepted Answer

A) both the short run and the long run. 
B) only in the short run. 
C) only in the long run. 
D) in neither the short run nor the long run. 
A) both the short run and the long run. 
B) only in the short run. 
C) only in the long run. 
D) in neither the short run nor the long run.

Question 3

The higher the average rate of inflation, the more frequently firms must adjust their prices, which implies that a high rate of inflation:

Accepted Answer

A) has no effect on the slope of the short-run aggregate supply curve. 
B) should make the short-run aggregate supply curve flatter. 
C) makes the short-run aggregate supply curve steeper. 
D) causes prices to be sticky. 
A) has no effect on the slope of the short-run aggregate supply curve. 
B) should make the short-run aggregate supply curve flatter. 
C) makes the short-run aggregate supply curve steeper. 
D) causes prices to be sticky.

Question 4

The NAIRU is the:

Accepted Answer

A) North American institutional rate of unemployment. 
B) natural aggregate investment return on utilization. 
C) nonaccelerating inflation rate of unemployment. 
D) normal American inelastic rate of unemployment. 
A) North American institutional rate of unemployment. 
B) natural aggregate investment return on utilization. 
C) nonaccelerating inflation rate of unemployment. 
D) normal American inelastic rate of unemployment.

Question 5

Both models of aggregate supply discussed in Chapter 12 imply that if the price level is higher than expected, then output natural rate of output.

Accepted Answer

A) exceeds the 
B) falls below the 
C) equals the 
D) moves to a different 
A) exceeds the 
B) falls below the 
C) equals the 
D) moves to a different

Question 6

Some firms do not instantly adjust the prices they charge in response to changes in demand for all of the following reasons except:

Accepted Answer

A) it is costly to alter prices. 
B) they do not want to annoy their frequent customers. 
C) prices do not adjust when there is perfect competition. 
D) some prices are set by long-term contracts between firms and customers. 
A) it is costly to alter prices. 
B) they do not want to annoy their frequent customers. 
C) prices do not adjust when there is perfect competition. 
D) some prices are set by long-term contracts between firms and customers.

Question 7

The hypothesis that hysteresis may play an important role in macroeconomics implies, among other things, that:

Accepted Answer

A) the history of economic thought is important to macroeconomics. 
B) workers get hysterical during long depressions. 
C) hysteresis lowers the sacrifice ratio. 
D) the natural rate of unemployment may increase if unemployment is high for a long period of time. 
A) the history of economic thought is important to macroeconomics. 
B) workers get hysterical during long depressions. 
C) hysteresis lowers the sacrifice ratio. 
D) the natural rate of unemployment may increase if unemployment is high for a long period of time.

Question 8

The assumption of rational expectations for inflation means that people will form their expectations of inflation by:

Accepted Answer

A) optimally using all available information, including information about current policies, to forecast the future. 
B) asking the opinions of the best experts. 
C) subscribing to the forecasting service that uses the best econometric model. 
D) basing their opinions on recently observed inflation. 
A) optimally using all available information, including information about current policies, to forecast the future. 
B) asking the opinions of the best experts. 
C) subscribing to the forecasting service that uses the best econometric model. 
D) basing their opinions on recently observed inflation.

According to the natural-rate hypothesis, output will be at the natural rate:

According to the natural-rate hypothesis, fluctuations in aggregate demand affect output in:

The higher the average rate of inflation, the more frequently firms must adjust their prices, which implies that a high rate of inflation:

The NAIRU is the:

Both models of aggregate supply discussed in Chapter 12 imply that if the price level is higher than expected, then output natural rate of output.

Some firms do not instantly adjust the prices they charge in response to changes in demand for all of the following reasons except:

The hypothesis that hysteresis may play an important role in macroeconomics implies, among other things, that:

The assumption of rational expectations for inflation means that people will form their expectations of inflation by:

The Science of Macroeconomics

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

Stabilization Policy

Government Debt and Budget Deficits

Introduction to the Financial System

Asset Prices and Interest Rates

Securities Markets

Banking

Financial Crises

Filters

Exam 12: Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

According to the natural-rate hypothesis, output will be at the natural rate:

According to the natural-rate hypothesis, fluctuations in aggregate demand affect output in:

The higher the average rate of inflation, the more frequently firms must adjust their prices, which implies that a high rate of inflation:

The NAIRU is the:

Both models of aggregate supply discussed in Chapter 12 imply that if the price level is higher than expected, then output natural rate of output.

Some firms do not instantly adjust the prices they charge in response to changes in demand for all of the following reasons except:

The hypothesis that hysteresis may play an important role in macroeconomics implies, among other things, that:

The assumption of rational expectations for inflation means that people will form their expectations of inflation by:

The Science of Macroeconomics

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

Stabilization Policy

Government Debt and Budget Deficits

Introduction to the Financial System

Asset Prices and Interest Rates

Securities Markets

Banking

Financial Crises

Filters