Question 1

The stagflation of the 1960s and 1970s showed policymakers that

Accepted Answer

A)  the Phillips curve should slope upward. 
B)  the Phillips curve was always a useful tool of analysis. 
C)  the Phillips curve could shift over time. 
D)  Keynes was wrong in his analysis of aggregate demand. 
A)  the Phillips curve should slope upward. 
B)  the Phillips curve was always a useful tool of analysis. 
C)  the Phillips curve could shift over time. 
D)  Keynes was wrong in his analysis of aggregate demand.

Question 2

Which event will NOT occur if policymakers want to keep unemployment below its natural rate?

Accepted Answer

A)  An aggregate demand will continually increase. 
B)  Inflation will be higher than expected. 
C)  An accelerating rate of inflation will occur. 
D)  Inflation will be lower than expected. 
A)  An aggregate demand will continually increase. 
B)  Inflation will be higher than expected. 
C)  An accelerating rate of inflation will occur. 
D)  Inflation will be lower than expected.

Question 3

If policymakers want to keep unemployment below the natural rate, they must continually increase aggregate demand so that inflation is always greater than anticipated, thereby setting up an inflationary spiral.

Accepted Answer

A) True 
 B)False

Question 4

Suppose you are a day trader in the stock market. If your objective is to make a profit by buying and selling stock, do you use adaptive or rational expectations? Why?

Accepted Answer

You use rational expectations. Adaptive

Question 5

Describe stagflation and give an example of when and why stagflation occurred in the United States.

Accepted Answer

Stagflation is the simultaneous occurren

Question 6

Efficiency wage theorists argue that monetary and fiscal policies will not work.

Accepted Answer

A) True 
 B)False

Question 7

The United States underwent _____ throughout most of 2009.

Accepted Answer

A)  deflation 
B)  disinflation 
C)  moderate inflation 
D)  stable prices 
A)  deflation 
B)  disinflation 
C)  moderate inflation 
D)  stable prices

Question 8

Increased globalization makes the practice of fiscal and monetary policy easier.

Accepted Answer

A) True 
 B)False

Question 9

During the 1960s in the United States, policymakers believed that if they accepted minor increases in inflation, they could keep unemployment low.

Accepted Answer

A) True 
 B)False

Question 10

(Figure: Understanding Phillips Curves) What is the natural rate of unemployment associated with Phillips curve PCb?

Accepted Answer

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

The stagflation of the 1960s and 1970s showed policymakers that

Which event will NOT occur if policymakers want to keep unemployment below its natural rate?

If policymakers want to keep unemployment below the natural rate, they must continually increase aggregate demand so that inflation is always greater than anticipated, thereby setting up an inflationary spiral.

Suppose you are a day trader in the stock market. If your objective is to make a profit by buying and selling stock, do you use adaptive or rational expectations? Why?

Describe stagflation and give an example of when and why stagflation occurred in the United States.

Efficiency wage theorists argue that monetary and fiscal policies will not work.

The United States underwent _____ throughout most of 2009.

Increased globalization makes the practice of fiscal and monetary policy easier.

During the 1960s in the United States, policymakers believed that if they accepted minor increases in inflation, they could keep unemployment low.

(Figure: Understanding Phillips Curves) What is the natural rate of unemployment associated with Phillips curve PC_b?

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

The stagflation of the 1960s and 1970s showed policymakers that

Which event will NOT occur if policymakers want to keep unemployment below its natural rate?

If policymakers want to keep unemployment below the natural rate, they must continually increase aggregate demand so that inflation is always greater than anticipated, thereby setting up an inflationary spiral.

Suppose you are a day trader in the stock market. If your objective is to make a profit by buying and selling stock, do you use adaptive or rational expectations? Why?

Describe stagflation and give an example of when and why stagflation occurred in the United States.

Efficiency wage theorists argue that monetary and fiscal policies will not work.

The United States underwent _____ throughout most of 2009.

Increased globalization makes the practice of fiscal and monetary policy easier.

During the 1960s in the United States, policymakers believed that if they accepted minor increases in inflation, they could keep unemployment low.

(Figure: Understanding Phillips Curves) What is the natural rate of unemployment associated with Phillips curve PCb?

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

(Figure: Understanding Phillips Curves) What is the natural rate of unemployment associated with Phillips curve PC_b?