Exam 14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

The key feature due to which unexpected inflation decreases the unemployment rate is that:

Which of the following would not be considered a real variable in determining a real business cycle?

The figure given below depicts the long run equilibrium in an economy.?Figure 14.1??In the figure:?AD₁ and AD₂: Aggregate demand curves?AS₁ and AS₂: Aggregate supply curves -Refer to Figure 14.1. Movement from point A to point C is equivalent to:

Which of the following is most likely to have contributed to better inventory management?

The long-run aggregate supply curve at potential national income is analogous to:

If the percentage increase in nominal wage rates is less than the percentage increase in the price level, then:

Which of the following is most likely to increase the natural rate of unemployment?

The long-run Phillips curve corresponds to the vertical region of the long-run aggregate supply curve.

The figure given below shows the Phillips curves of the U.S. economy during early 1960s to late 1970s.?Figure 14.2 -Refer to Figure 14.2. Phillips curve II is associated with the late 1980s in the United States and indicates that 5 percent unemployment was consistent with 4 percent inflation. Which curve would be associated with the late 1970s in the United States?

According to Regulation Q, the maximum interest rate that the U.S. banks could pay on deposits was limited by the Federal Reserve. This reduced volatility in the financial markets and largely benefited the U.S. banks.

Which of the following gives the Fed a credibility problem because the Fed may change its planned policies in light of new economic developments?

Figure 14.4 -Refer to Figure 14.4. If the observed unemployment rate equals the natural rate, and the expected rate of inflation equals zero, the economy will be operating at:

Which of the following techniques adopted by the central banks around the world have helped them to achieve credibility?

A fiscal policy that changes over time as economic conditions change is considered to be time inconsistent.

Monetary reform is a new monetary policy that includes:

The money supply in an economy declines when, other things equal, _____.

The change in the money supply in an economy is measured as:

The actual rate of inflation is equal to the expected rate of inflation along the:

When workers expect more inflation than actually occurs:

Which of the following will be a short run impact of a pre-election expansionary fiscal policy, public expectations remaining constant?