Exam 26: Rational Expectations Redux: Monetary Policy Implications

arrow
  • Select Tags
search iconSearch Question
flashcardsStudy Flashcards
  • Select Tags

If expectations are rational, the credibility of an anti-inflation announcement reduces the resulting fall in employment.

Free
(True/False)
4.9/5
(41)
Correct Answer:
Verified

True

At the beginning of the Reagan administration, AS shifted in spite of the Fed's commitment to lower inflation. What does this imply about the labor market and the validity of the new classical assumptions?

Free
(Essay)
4.8/5
(41)
Correct Answer:
Verified

The shift indicated the wages must have continued to rise, as inflation was expected to continue. Either the announcement was completely credible or wages were sticky, in contrast to the new classical assumptions.

When a central bank announces that it will lower inflation, it is attempting to influence

Free
(Multiple Choice)
4.9/5
(42)
Correct Answer:
Verified

C

Unanticipated monetary policy designed to reduce inflation would lead to a reduction in employment under which model?

(Multiple Choice)
4.7/5
(35)

The new Keynesian model assumes price and wages are flexible.

(True/False)
4.9/5
(36)

Starting from the natural rate, if prices are sticky, anticipated EMP will raise equilibrium output and inflation.

(True/False)
4.8/5
(35)

New Keynesians believe that anticipated policies have some short-term effects due to wage and price stickiness.

(True/False)
4.8/5
(35)

Why do new classical economists say that activist policy might be not just ineffective but mistaken?

(Essay)
4.9/5
(34)

U.S. economy in the early 1980s gave support for the key assumptions of the new Keynesian model.

(True/False)
4.8/5
(29)

According to the new Keynesian model, expansionary monetary policy can be effective if it is

(Multiple Choice)
4.8/5
(26)

Credibility of the monetary policymaker is important according to the new Keynesian model.

(True/False)
4.9/5
(41)

A large change in expectations can cause EMP to lead to a reduction in output if the shift in _____ is not sufficiently large.

(Multiple Choice)
5.0/5
(41)

If an increase in the money supply is less than what was expected, output will rise.

(True/False)
4.7/5
(43)

What is the major element introduced to macroeconomics models by new classical economists?

(Short Answer)
4.8/5
(35)

In the new Keynesian model, a credible commitment to lower inflation will cause output to rise.

(True/False)
4.9/5
(40)

Credibility of an inflation reduction policy does NOT matter in which of the following models?

(Multiple Choice)
4.8/5
(34)

Under rational expectations, shifts in AS take less time.

(True/False)
4.8/5
(30)

Assuming flexible prices, if the federal funds rate rises more than expected, then the shift to the _____ by AD will be _____ than the shift to the _____ by AS in the short run.

(Multiple Choice)
4.7/5
(35)

If autonomous consumption rises more than expected, then output rises under the

(Multiple Choice)
4.9/5
(39)

New Keynesian economists believe that EMP cannot increase output above the natural rate in the short run.

(True/False)
4.9/5
(39)
Showing 1 - 20 of 69
close modal

Filters

  • Essay(0)
  • Multiple Choice(0)
  • Short Answer(0)
  • True False(0)
  • Matching(0)