Question 1

Under what conditions do monetary policy changes have the larger real effects on an economy?

Accepted Answer

Monetary policy changes have t

Question 2

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

Accepted Answer

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

Question 3

Why even with the possibility of real wage misperceptions is the market clearing model still neutral in the long run?

Accepted Answer

Over time households learn that they hav

Question 4

What is the difference between discretionary monetary policy and monetary policy under a policy rule?

Accepted Answer

With discretionary monetary policy the m

Question 5

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

Accepted Answer

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

Question 6

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

Question 7

If the actual price level is above the expected price level, then workers' actual real wage will be below their expected real wage.

Accepted Answer

A) True 
 B)False

Question 8

The workers' perceived real wage rate is:

Accepted Answer

A) their nominal wage rate divided by the actual price level. 
B) the actual price level divided by their nominal wage rate. 
C) their nominal wage rate divided by the expected price level. 
D) the expected price level divided by their nominal wage rate. 
A) their nominal wage rate divided by the actual price level. 
B) the actual price level divided by their nominal wage rate. 
C) their nominal wage rate divided by the expected price level. 
D) the expected price level divided by their nominal wage rate.

Question 9

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

Question 10

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

Accepted Answer

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

Question 11

The price misperception model predicts:

Accepted Answer

A) the price level will be countercyclical while in the data 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 procyclical and in the data the real wage is procyclical. 
D) all of the above. 
A) the price level will be countercyclical while in the data 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 procyclical and in the data the real wage is procyclical. 
D) all of the above.

Question 12

Real variables can only be affected by:

Accepted Answer

A) unperceived changes in the price level. 
B) perceived changes in the price level. 
C) expected changes in the price level. 
D) actual changes in the price level. 
A) unperceived changes in the price level. 
B) perceived changes in the price level. 
C) expected changes in the price level. 
D) actual changes in the price level.

Question 13

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 neutral. 
B) money negatively affects real GDP. 
C) labour supply ultimately declines. 
D) all of the above. 
A) money is neutral. 
B) money negatively affects real GDP. 
C) labour supply ultimately declines. 
D) all of the above.

Question 14

Price misperception during a positive technology shock would cause:

Accepted Answer

A) output or GDP to fall by more 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 less than the actual price level falls. 
D) all of the above. 
A) output or GDP to fall by more 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 less than the actual price level falls. 
D) all of the above.

Question 15

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

Accepted Answer

A) surprises households. 
B) is random. 
C) is unpredictable. 
D) all of the above. 
A) surprises households. 
B) is random. 
C) is unpredictable. 
D) all of the above.

Question 16

If the nominal wage is €10 per hour and the expected price level is 2 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 17

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

Accepted Answer

A) surprises households. 
B) is consistent. 
C) is predictable. 
D) all of the above. 
A) surprises households. 
B) is consistent. 
C) is predictable. 
D) all of the above.

Question 18

The price misperception model predicts:

Accepted Answer

A) the price level will be procyclical while 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 procyclical and in the data the real wage is procyclical. 
D) all of the above. 
A) the price level will be procyclical while 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 procyclical and in the data the real wage is procyclical. 
D) all of the above.

Question 19

If households misperceive prices, they may change real decisions in response to changes in the money supply in the long run.

Accepted Answer

A) True 
 B)False

Question 20

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

Under what conditions do monetary policy changes have the larger real effects on an economy?

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

Why even with the possibility of real wage misperceptions is the market clearing model still neutral in the long run?

What is the difference between discretionary monetary policy and monetary policy under a policy rule?

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

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:

If the actual price level is above the expected price level, then workers' actual real wage will be below their expected real wage.

The workers' perceived 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:

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

The price misperception model predicts:

Real variables can only be affected by:

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:

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

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

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

The price misperception model predicts:

If households misperceive prices, they may change real decisions in response to changes in the money supply in the long run.

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

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

Under what conditions do monetary policy changes have the larger real effects on an economy?

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

Why even with the possibility of real wage misperceptions is the market clearing model still neutral in the long run?

What is the difference between discretionary monetary policy and monetary policy under a policy rule?

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

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:

If the actual price level is above the expected price level, then workers' actual real wage will be below their expected real wage.

The workers' perceived 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:

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

The price misperception model predicts:

Real variables can only be affected by:

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:

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

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

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

The price misperception model predicts:

If households misperceive prices, they may change real decisions in response to changes in the money supply in the long run.

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

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