Question 1

A monetary policy rule is when the monetary authority:

Accepted Answer

A) does not commit to future monetary actions. 
B) commits to future monetary actions. 
C) often produces a monetary surprise to households. 
D) always behaves in unpredictable ways. 
A) does not commit to future monetary actions. 
B) commits to future monetary actions. 
C) often produces a monetary surprise to households. 
D) always behaves in unpredictable ways.

Question 2

If the nominal wage rises from €10 per hour in period 1 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 falling. 
C) the actual real wage is falling. 
D) all of the above. 
A) the nominal wage is falling. 
B) the expected real wage is falling. 
C) the actual real wage is falling. 
D) all of the above.

Question 3

A monetary shock of a given size has a larger real effect:

Accepted Answer

A) the more it is anticipated by the public. 
B) the more stable the underlying monetary environment. 
C) the more fully it is explained and communicated to the public. 
D) all of the above. 
A) the more it is anticipated by the public. 
B) the more stable the underlying monetary environment. 
C) the more fully it is explained and communicated to the public. 
D) all of the above.

Question 4

In the short run if households' perceived money growth and inflation equals the actual money growth and inflation, then

Accepted Answer

A) money affects real variables like labour supply. 
B) money affects real variables like GDP. 
C) the model is still neutral even in the short run. 
D) all of the above. 
A) money affects real variables like labour supply. 
B) money affects real variables like GDP. 
C) the model is still neutral even in the short run. 
D) all of the above.

Question 5

If the nominal wage is €10 per hour and the expected price level is 5 and the actual price level is 4, then actual nominal 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 6

Monetary policy authorities can only affect the real economy, if:

Accepted Answer

A) their actions are anticipated by the public. 
B) their actions are consistent and predictable. 
C) their actions are fully communicated to the public. 
D) their actions systematically fool the public. 
A) their actions are anticipated by the public. 
B) their actions are consistent and predictable. 
C) their actions are fully communicated to the public. 
D) their actions systematically fool the public.

Question 7

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

Accepted Answer

A) is fully communicated to households. 
B) is consistent. 
C) is unpredictable. 
D) all of the above. 
A) is fully communicated to households. 
B) is consistent. 
C) is unpredictable. 
D) all of the above.

Question 8

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

Accepted Answer

A) money is neutral. 
B) money does not affect real GDP. 
C) labour supply returns to its initial position. 
D) all of the above. 
A) money is neutral. 
B) money does not affect real GDP. 
C) labour supply returns to its initial position. 
D) all of the above.

Question 9

An increase in the money supply:

Accepted Answer

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

Question 10

An increase in the money supply:

Accepted Answer

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

Question 11

If monetary authorities follow a monetary rule, then monetary policy is more effective in affecting real variables like real GDP.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

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

Question 13

What are the short run effects of a real wage misperception in the market clearing model?

Accepted Answer

If workers perceive their real wage to b

Question 14

Discretionary monetary policy is when the monetary authority:

Accepted Answer

A) does not commit to future monetary actions. 
B) commits to future monetary actions. 
C) never produces a monetary surprise to households. 
D) always behaves in a predictable way. 
A) does not commit to future monetary actions. 
B) commits to future monetary actions. 
C) never produces a monetary surprise to households. 
D) always behaves in a predictable way.

Question 15

If the nominal wage is €10 per hour and the expected price level is 2 and the actual price level is 4, then actual nominal 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 16

Money can only effect real variables in the short run, if people expect the increase in the money supply.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the money supply:

Accepted Answer

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

Question 18

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

Question 19

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 rise by less 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 fall by more 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 more than the actual price level falls. 
D) all of the above.

Question 20

We would expect households to have incomplete information about:

Accepted Answer

A) their own wage rate. 
B) products they purchase frequently. 
C) products purchased occasionally like an automobile. 
D) all of the above. 
A) their own wage rate. 
B) products they purchase frequently. 
C) products purchased occasionally like an automobile. 
D) all of the above.

A monetary policy rule is when the monetary authority:

If the nominal wage rises from €10 per hour in period 1 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:

A monetary shock of a given size has a larger real effect:

In the short run if households' perceived money growth and inflation equals the actual money growth and inflation, then

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

Monetary policy authorities can only affect the real economy, if:

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

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

An increase in the money supply:

An increase in the money supply:

If monetary authorities follow a monetary rule, then monetary policy is more effective in affecting real variables like real GDP.

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

What are the short run effects of a real wage misperception in the market clearing model?

Discretionary monetary policy is when the monetary authority:

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

Money can only effect real variables in the short run, if people expect the increase in the money supply.

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 actual real wage rate is:

Price misperception during a positive technology shock would cause:

We would expect households to have incomplete information about:

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

A monetary policy rule is when the monetary authority:

If the nominal wage rises from €10 per hour in period 1 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:

A monetary shock of a given size has a larger real effect:

In the short run if households' perceived money growth and inflation equals the actual money growth and inflation, then

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

Monetary policy authorities can only affect the real economy, if:

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

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

An increase in the money supply:

An increase in the money supply:

If monetary authorities follow a monetary rule, then monetary policy is more effective in affecting real variables like real GDP.

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

What are the short run effects of a real wage misperception in the market clearing model?

Discretionary monetary policy is when the monetary authority:

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

Money can only effect real variables in the short run, if people expect the increase in the money supply.

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 actual real wage rate is:

Price misperception during a positive technology shock would cause:

We would expect households to have incomplete information about:

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