Exam 15: A Dynamic Model of Economic Fluctuations

When the central bank lowers its target inflation rate, it _ the nominal and real interest rate, which shifts the dynamic aggregate demand curve to the _.

(Multiple Choice)

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Question 41

According to the monetary policy rule (assuming θ_π > 0) when inflation increases, the central bank increases the nominal interest rate by _ the increase in the rate of inflation, which _ the real interest rate.

(Multiple Choice)

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Question 42

Which of the following would be represented by a positive value of the demand shock, ε_t?

(Multiple Choice)

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Question 43

The dynamic aggregate demand curve illustrates the _ relationship between the quantity of output in the short run and _.

(Multiple Choice)

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Question 44

The short-run equilibrium in the dynamic model of aggregate demand and aggregate supply is determined by the intersection of the:

(Multiple Choice)

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Question 45

Expectations of inflation based on recently observed inflation is called the assumption of _____ expectations.

(Multiple Choice)

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Question 46

Increases in the natural level of output allow the economy to produce _ goods and services and make people want to buy _ goods and services.

(Multiple Choice)

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Question 47

A central bank that chooses a large value of θ_π and a small value of θ_Y is choosing to obtain less _ at the expense of more _.

(Multiple Choice)

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Question 48

Fill in the blanks: As a dynamic response to a positive supply shock in the short run, the DAS curve shifts (say in period t) ___ while the DAD curve _, causing inflation to _ and output to ___.

(Short Answer)

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Question 49

In order to achieve the target for the nominal interest rate established by the monetary policy rule, the central bank adjusts:

(Multiple Choice)

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Question 50

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, a temporary five-period tax increase causes output to _____ returning to the natural level in the long run.

(Multiple Choice)

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Question 51

Which of the following is an endogenous variable in the dynamic model of aggregate demand and aggregate supply?

(Multiple Choice)

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Question 52

The short-run equilibrium in the dynamic model of aggregate demand and supply determines the:

(Multiple Choice)

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Question 53

The dynamic aggregate supply curve shows the short-run relation between:

(Multiple Choice)

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Question 54

According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:

(Multiple Choice)

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Question 55

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?

(Multiple Choice)

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Question 56

The dynamic aggregate demand curve will shift to the right if there is a:

(Multiple Choice)

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Question 57

That output Y_t and the real interest rate r_t do not depend on the central bank's inflation target in long-run equilibrium in the dynamic model of aggregate demand and aggregate supply demonstrates:

(Multiple Choice)

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Question 58

According to the Taylor rule, when real GDP is below its natural level, the overnight rate should be _, and when inflation exceeds 2 percent, the overnight rate should be _.

(Multiple Choice)

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Question 59

Long-run equilibrium occurs in the dynamic model of aggregate demand and aggregate supply when:

(Multiple Choice)

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Question 60

Showing 41 - 60 of 83

When the central bank lowers its target inflation rate, it _ the nominal and real interest rate, which shifts the dynamic aggregate demand curve to the _.

According to the monetary policy rule (assuming θ_π > 0) when inflation increases, the central bank increases the nominal interest rate by _ the increase in the rate of inflation, which _ the real interest rate.

Which of the following would be represented by a positive value of the demand shock, ε_t?

The dynamic aggregate demand curve illustrates the _ relationship between the quantity of output in the short run and _.

The short-run equilibrium in the dynamic model of aggregate demand and aggregate supply is determined by the intersection of the:

Expectations of inflation based on recently observed inflation is called the assumption of _____ expectations.

Increases in the natural level of output allow the economy to produce _ goods and services and make people want to buy _ goods and services.

A central bank that chooses a large value of θ_π and a small value of θ_Y is choosing to obtain less _ at the expense of more _.

Fill in the blanks: As a dynamic response to a positive supply shock in the short run, the DAS curve shifts (say in period t) ___ while the DAD curve _, causing inflation to _ and output to ___.

In order to achieve the target for the nominal interest rate established by the monetary policy rule, the central bank adjusts:

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, a temporary five-period tax increase causes output to _____ returning to the natural level in the long run.

Which of the following is an endogenous variable in the dynamic model of aggregate demand and aggregate supply?

The short-run equilibrium in the dynamic model of aggregate demand and supply determines the:

The dynamic aggregate supply curve shows the short-run relation between:

According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?

The dynamic aggregate demand curve will shift to the right if there is a:

That output Y_t and the real interest rate r_t do not depend on the central bank's inflation target in long-run equilibrium in the dynamic model of aggregate demand and aggregate supply demonstrates:

According to the Taylor rule, when real GDP is below its natural level, the overnight rate should be _, and when inflation exceeds 2 percent, the overnight rate should be _.

Long-run equilibrium occurs in the dynamic model of aggregate demand and aggregate supply when:

The Science of Macroeconomics

The Data of Microeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

Filters

Exam 15: A Dynamic Model of Economic Fluctuations

When the central bank lowers its target inflation rate, it _____ the nominal and real interest rate, which shifts the dynamic aggregate demand curve to the _____.

According to the monetary policy rule (assuming θπ > 0) when inflation increases, the central bank increases the nominal interest rate by _____ the increase in the rate of inflation, which _____ the real interest rate.

Which of the following would be represented by a positive value of the demand shock, εt?

The dynamic aggregate demand curve illustrates the _____ relationship between the quantity of output in the short run and _____.

The short-run equilibrium in the dynamic model of aggregate demand and aggregate supply is determined by the intersection of the:

Expectations of inflation based on recently observed inflation is called the assumption of _____ expectations.

Increases in the natural level of output allow the economy to produce _____ goods and services and make people want to buy _____ goods and services.

A central bank that chooses a large value of θπ and a small value of θY is choosing to obtain less _____ at the expense of more _____.

Fill in the blanks: As a dynamic response to a positive supply shock in the short run, the DAS curve shifts (say in period t) _____ while the DAD curve _____, causing inflation to _____ and output to _____.

In order to achieve the target for the nominal interest rate established by the monetary policy rule, the central bank adjusts:

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, a temporary five-period tax increase causes output to _____ returning to the natural level in the long run.

Which of the following is an endogenous variable in the dynamic model of aggregate demand and aggregate supply?

The short-run equilibrium in the dynamic model of aggregate demand and supply determines the:

The dynamic aggregate supply curve shows the short-run relation between:

According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?

The dynamic aggregate demand curve will shift to the right if there is a:

That output Yt and the real interest rate rt do not depend on the central bank's inflation target in long-run equilibrium in the dynamic model of aggregate demand and aggregate supply demonstrates:

According to the Taylor rule, when real GDP is below its natural level, the overnight rate should be _____, and when inflation exceeds 2 percent, the overnight rate should be _____.

Long-run equilibrium occurs in the dynamic model of aggregate demand and aggregate supply when:

The Science of Macroeconomics

The Data of Microeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

Filters

When the central bank lowers its target inflation rate, it _ the nominal and real interest rate, which shifts the dynamic aggregate demand curve to the _.

According to the monetary policy rule (assuming θ_π > 0) when inflation increases, the central bank increases the nominal interest rate by _ the increase in the rate of inflation, which _ the real interest rate.

Which of the following would be represented by a positive value of the demand shock, ε_t?

The dynamic aggregate demand curve illustrates the _ relationship between the quantity of output in the short run and _.

Increases in the natural level of output allow the economy to produce _ goods and services and make people want to buy _ goods and services.

A central bank that chooses a large value of θ_π and a small value of θ_Y is choosing to obtain less _ at the expense of more _.

Fill in the blanks: As a dynamic response to a positive supply shock in the short run, the DAS curve shifts (say in period t) ___ while the DAD curve _, causing inflation to _ and output to ___.

That output Y_t and the real interest rate r_t do not depend on the central bank's inflation target in long-run equilibrium in the dynamic model of aggregate demand and aggregate supply demonstrates:

According to the Taylor rule, when real GDP is below its natural level, the overnight rate should be _, and when inflation exceeds 2 percent, the overnight rate should be _.