Question 1

On what types of prices do households have the best information and on what types of products may they have incomplete information?

Accepted Answer

Households have the best information on their own wage rates and the prices of goods they buy frequently. Households may have incomplete information on wages offered at other jobs and goods they buy less frequently like automobiles for most households.

Question 2

An increase in the money supply and inflation can only affect real variables only:

Accepted Answer

A) if households perceive it is happening. 
B) if households do not perceive all of the inflation. 
C) in the long run. 
D) if households expect it. 
A) if households perceive it is happening. 
B) if households do not perceive all of the inflation. 
C) in the long run. 
D) if households expect it. B

Question 3

We would expect households to have incomplete information about:

Accepted Answer

A) their own wage rate. 
B) products they purchase frequently. 
C) wage rates available on other jobs. 
D) all of the above. 
A) their own wage rate. 
B) products they purchase frequently. 
C) wage rates available on other jobs. 
D) all of the above. C

Question 4

The price misperception model predicts:

Accepted Answer

A) the price level will be countercyclical and in the data the price level is countercyclical. 
B) the nominal quantity of money is countercyclical while in the data money is weakly procyclical. 
C) the real wage is countercyclical while in the data the real wage is procyclical. 
D) all of the above. 
A) the price level will be countercyclical and in the data the price level is countercyclical. 
B) the nominal quantity of money is countercyclical while in the data money is weakly procyclical. 
C) the real wage is countercyclical while in the data the real wage is procyclical. 
D) all of the above.

Question 5

Price misperception during a positive technology shock would cause:

Accepted Answer

A) output or GDP to rise by less than it would without price misperception. 
B) labour supply to fall by more than it would without price misperception. 
C) the expected price level to fall more than the actual price level falls. 
D) all of the above. 
A) output or GDP to rise by less than it would without price misperception. 
B) labour supply to fall by more than it would without price misperception. 
C) the expected price level to fall more than the actual price level falls. 
D) all of the above.

Question 6

If the perceive real wage goes up, real GDP increases:

Accepted Answer

A) unless the actual real wage remains the same or falls. 
B) in the long run. 
C) in the short run. 
D) all of the above. 
A) unless the actual real wage remains the same or falls. 
B) in the long run. 
C) in the short run. 
D) all of the above.

Question 7

An increase in the money supply:

Accepted Answer

A) can affect real variables temporarily in the short run. 
B) can not affect nominal variables in the short run. 
C) can affect real variables in the long run. 
D) all of the above. 
A) can affect real variables temporarily in the short run. 
B) can not affect nominal variables in the short run. 
C) can affect real variables in the long run. 
D) all of the above.

Question 8

If the nominal wage is €10 per hour and the expected price level is 2 and the actual price level is 4, then expected real wage rate is:

Accepted Answer

A) €10. 
B) €5. 
C) €2.50. 
D) none of the above. 
A) €10. 
B) €5. 
C) €2.50. 
D) none of the above.

Question 9

While price misperceptions can cause an increase in labour supply and GDP in the short-run, in the long run:

Accepted Answer

A) money is no longer neutral in the model. 
B) money negatively impacts real GDP. 
C) labour supply returns to its initial position. 
D) all of the above. 
A) money is no longer neutral in the model. 
B) money negatively impacts real GDP. 
C) labour supply returns to its initial position. 
D) all of the above.

Question 10

While price misperceptions can cause an increase in labour supply and GDP in the short-run, in the long run:

Accepted Answer

A) money is no longer neutral in the model. 
B) money does not affect real GDP. 
C) labour supply falls by more than its initial increase. 
D) all of the above. 
A) money is no longer neutral in the model. 
B) money does not affect real GDP. 
C) labour supply falls by more than its initial increase. 
D) all of the above.

Question 11

Price misperception during a positive technology shock would cause:

Accepted Answer

A) output or GDP to rise by less than it would without price misperception. 
B) labour supply to rise by less than it would without price misperception. 
C) the expected price level to fall less than the actual price level falls. 
D) all of the above. 
A) output or GDP to rise by less than it would without price misperception. 
B) labour supply to rise by less than it would without price misperception. 
C) the expected price level to fall less than the actual price level falls. 
D) all of the above.

Question 12

In the current period a perceived increase in the real wage, will cause households to:

Accepted Answer

A) work more. 
B) consume more goods. 
C) consume less leisure. 
D) all of the above. 
A) work more. 
B) consume more goods. 
C) consume less leisure. 
D) all of the above.

Question 13

If the perceive real wage goes up, workers will supply more labour:

Accepted Answer

A) unless the actual real wage remains the same or falls. 
B) in the long run. 
C) in the short run. 
D) all of the above. 
A) unless the actual real wage remains the same or falls. 
B) in the long run. 
C) in the short run. 
D) all of the above.

Question 14

The price misperception model predicts:

Accepted Answer

A) the price level will be procyclical while in data the the price level is countercyclical. 
B) the nominal quantity of money is procyclical and in the data money is weakly procyclical. 
C) the real wage is countercyclical while in the data the real wage is procyclical. 
D) all of the above. 
A) the price level will be procyclical while in data the the price level is countercyclical. 
B) the nominal quantity of money is procyclical and in the data money is weakly procyclical. 
C) the real wage is countercyclical while in the data the real wage is procyclical. 
D) all of the above.

Question 15

We would expect households to have the most complete information about:

Accepted Answer

A) the wage rate available on other jobs. 
B) products they purchase frequently. 
C) products purchased occasionally like an automobile. 
D) all of the above. 
A) the wage rate available on other jobs. 
B) products they purchase frequently. 
C) products purchased occasionally like an automobile. 
D) all of the above.

Question 16

If the nominal wage is €10 per hour and the expected price level is 5 and the actual price level is 4, then expected real wage rate is:

Accepted Answer

A) €10. 
B) €2.50. 
C) €2. 
D) none of the above. 
A) €10. 
B) €2.50. 
C) €2. 
D) none of the above.

Question 17

If the nominal wage rises from €10 per hour in period one to €15 per hour in period 2 as the expected price level rises from 1 to 3 while the actual price level rises from 4 to 5, then from period 1 to period 2:

Accepted Answer

A) the nominal wage is rising. 
B) the expected real wage is rising. 
C) the actual real wage is falling. 
D) all of the above. 
A) the nominal wage is rising. 
B) the expected real wage is rising. 
C) the actual real wage is falling. 
D) all of the above.

Question 18

The real effect of a given monetary shock is larger the more stable the underlying monetary environment.

Accepted Answer

A) True 
 B)False

Question 19

If the nominal wage is €10 per hour and the expected price level is 5 and the actual price level is 4, then:

Accepted Answer

A) the expected real wage rate is greater than the actual real wage rate. 
B) the expected real wage rate is less than the actual real wage rate. 
C) the expected real wage rate is greater than the actual nominal wage rate. 
D) the actual real wage rate is greater than the actual nominal wage rate. 
A) the expected real wage rate is greater than the actual real wage rate. 
B) the expected real wage rate is less than the actual real wage rate. 
C) the expected real wage rate is greater than the actual nominal wage rate. 
D) the actual real wage rate is greater than the actual nominal wage rate.

Question 20

Monetary policy can affect real variables in the short run if monetary policy:

Accepted Answer

A) is fully explained to households. 
B) is random. 
C) is predictable. 
D) all of the above. 
A) is fully explained to households. 
B) is random. 
C) is predictable. 
D) all of the above.

On what types of prices do households have the best information and on what types of products may they have incomplete information?

An increase in the money supply and inflation can only affect real variables only:

We would expect households to have incomplete information about:

The price misperception model predicts:

Price misperception during a positive technology shock would cause:

If the perceive real wage goes up, real GDP increases:

An increase in the money supply:

If the nominal wage is €10 per hour and the expected price level is 2 and the actual price level is 4, then expected real wage rate is:

While price misperceptions can cause an increase in labour supply and GDP in the short-run, in the long run:

While price misperceptions can cause an increase in labour supply and GDP in the short-run, in the long run:

Price misperception during a positive technology shock would cause:

In the current period a perceived increase in the real wage, will cause households to:

If the perceive real wage goes up, workers will supply more labour:

The price misperception model predicts:

We would expect households to have the most complete information about:

If the nominal wage is €10 per hour and the expected price level is 5 and the actual price level is 4, then expected real wage rate is:

If the nominal wage rises from €10 per hour in period one to €15 per hour in period 2 as the expected price level rises from 1 to 3 while the actual price level rises from 4 to 5, then from period 1 to period 2:

The real effect of a given monetary shock is larger the more stable the underlying monetary environment.

If the nominal wage is €10 per hour and the expected price level is 5 and the actual price level is 4, then:

Monetary policy can affect real variables in the short run if monetary policy:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

Exam 16: Money and Business Cycles I: the Price-Misperceptions Model

On what types of prices do households have the best information and on what types of products may they have incomplete information?

An increase in the money supply and inflation can only affect real variables only:

We would expect households to have incomplete information about:

The price misperception model predicts:

Price misperception during a positive technology shock would cause:

If the perceive real wage goes up, real GDP increases:

An increase in the money supply:

If the nominal wage is €10 per hour and the expected price level is 2 and the actual price level is 4, then expected real wage rate is:

While price misperceptions can cause an increase in labour supply and GDP in the short-run, in the long run:

While price misperceptions can cause an increase in labour supply and GDP in the short-run, in the long run:

Price misperception during a positive technology shock would cause:

In the current period a perceived increase in the real wage, will cause households to:

If the perceive real wage goes up, workers will supply more labour:

The price misperception model predicts:

We would expect households to have the most complete information about:

If the nominal wage is €10 per hour and the expected price level is 5 and the actual price level is 4, then expected real wage rate is:

If the nominal wage rises from €10 per hour in period one to €15 per hour in period 2 as the expected price level rises from 1 to 3 while the actual price level rises from 4 to 5, then from period 1 to period 2:

The real effect of a given monetary shock is larger the more stable the underlying monetary environment.

If the nominal wage is €10 per hour and the expected price level is 5 and the actual price level is 4, then:

Monetary policy can affect real variables in the short run if monetary policy:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters