Question 1

Which of the following statements is correct?

Accepted Answer

A)  New classicals believe that the aggregate supply curve is vertical in the short run. 
B)  New Keynesians believe that the aggregate supply curve is vertical in the short run. 
C)  New Keynesians believe that the aggregate supply curve slopes upward in the long run. 
D)  New classicals believe that the aggregate supply curve slopes upward in the short run. 
A)  New classicals believe that the aggregate supply curve is vertical in the short run. 
B)  New Keynesians believe that the aggregate supply curve is vertical in the short run. 
C)  New Keynesians believe that the aggregate supply curve slopes upward in the long run. 
D)  New classicals believe that the aggregate supply curve slopes upward in the short run.

Question 2

What does the coefficient a in the new classical expression for short-run aggregate supply represent?

Accepted Answer

A)  the full employment level of output 
B)  the price level in the previous period 
C)  how much output responds when the actual price level differs from the expected price level 
D)  how much the price level responds when the actual level of output differs from the full-employment level of output 
A)  the full employment level of output 
B)  the price level in the previous period 
C)  how much output responds when the actual price level differs from the expected price level 
D)  how much the price level responds when the actual level of output differs from the full-employment level of output

Question 3

Most economists believe that the aggregate supply curve is

Accepted Answer

A)  upward-sloping in the short run, but vertical in the long run. 
B)  upward-sloping in the long run, but vertical in the short run. 
C)  upward-sloping in both the short run and the long run. 
D)  vertical in both the short run and the long run. 
A)  upward-sloping in the short run, but vertical in the long run. 
B)  upward-sloping in the long run, but vertical in the short run. 
C)  upward-sloping in both the short run and the long run. 
D)  vertical in both the short run and the long run.

Question 4

According to Robert Gordon,what led to the decline in unemployment in the 1940s?

Accepted Answer

A)  structural barriers to expanding output and employment disappeared once a sufficiently large increase in aggregate demand had taken place 
B)  decline in unionization of the workforce 
C)  President Truman moving away from the policies implemented by President Roosevelt 
D)  the strengthening of property rights following the end of the New Deal 
A)  structural barriers to expanding output and employment disappeared once a sufficiently large increase in aggregate demand had taken place 
B)  decline in unionization of the workforce 
C)  President Truman moving away from the policies implemented by President Roosevelt 
D)  the strengthening of property rights following the end of the New Deal

Question 5

Which of the following is NOT a characteristic of competitive markets?

Accepted Answer

A)  They produce a standardized product. 
B)  Purchases and sales of individual traders are small relative to the total volume traded. 
C)  Prices adjust quickly. 
D)  There are relatively few sellers. 
A)  They produce a standardized product. 
B)  Purchases and sales of individual traders are small relative to the total volume traded. 
C)  Prices adjust quickly. 
D)  There are relatively few sellers.

Question 6

If the economy experiences simultaneous negative aggregate demand and aggregate supply shocks,and the Fed decides to intervene with expansionary policy.Aggregate demand will eventually shift back to the right,which will eventually bring the economy

Accepted Answer

A)  back to potential GDP at a lower price level. 
B)  back to potential GDP at a higher price level. 
C)  back to the original equilibrium price at a lower level of aggregate output. 
D)  back to the original equilibrium price at a higher level of aggregate output. 
A)  back to potential GDP at a lower price level. 
B)  back to potential GDP at a higher price level. 
C)  back to the original equilibrium price at a lower level of aggregate output. 
D)  back to the original equilibrium price at a higher level of aggregate output.

Question 7

A shift of the AD curve

Accepted Answer

A)  to the right is considered expansionary, and a shift to the left is considered contractionary. 
B)  to the left is considered expansionary, and a shift to the right is considered contractionary. 
C)  to the right or to the left is considered contractionary. 
D)  to the right or to the left is considered expansionary. 
A)  to the right is considered expansionary, and a shift to the left is considered contractionary. 
B)  to the left is considered expansionary, and a shift to the right is considered contractionary. 
C)  to the right or to the left is considered contractionary. 
D)  to the right or to the left is considered expansionary.

Question 8

Following the recession of 2007-2009,the unemployment rate ________ by October 2009.

Accepted Answer

A)  fell to 5.0% 
B)  rose to 10.0% 
C)  returned to its pre-recession level 
D)  stabilized at 6.5% 
A)  fell to 5.0% 
B)  rose to 10.0% 
C)  returned to its pre-recession level 
D)  stabilized at 6.5%

Question 9

If the expected price level increases at the same time that the federal government cuts taxes,in the short run

Accepted Answer

A)  aggregate output and the price level will both increase. 
B)  aggregate output will increase, but the price level will fall. 
C)  aggregate output and the price level will both fall. 
D)  the price level will increase, but aggregate output may either increase or decrease. 
A)  aggregate output and the price level will both increase. 
B)  aggregate output will increase, but the price level will fall. 
C)  aggregate output and the price level will both fall. 
D)  the price level will increase, but aggregate output may either increase or decrease.

Question 10

Why is the short-term nominal interest rate the opportunity cost of holding money?

Accepted Answer

The higher the interest rate o

Question 11

If oil prices fall at the same time that the federal government increases its purchases,in the short run

Accepted Answer

A)  aggregate output and the price level will both increase. 
B)  aggregate output will increase, but the price level will fall. 
C)  aggregate output and the price level will both fall. 
D)  aggregate output will increase, but the price level may either increase or decrease. 
A)  aggregate output and the price level will both increase. 
B)  aggregate output will increase, but the price level will fall. 
C)  aggregate output and the price level will both fall. 
D)  aggregate output will increase, but the price level may either increase or decrease.

Question 12

According to the new classical view,aggregate output will differ from full-employment output

Accepted Answer

A)  whenever saving does not equal investment. 
B)  only if the actual price level does not equal the expected price level. 
C)  only if the federal government's expenditures are greater than its tax receipts. 
D)  whenever imports exceed exports. 
A)  whenever saving does not equal investment. 
B)  only if the actual price level does not equal the expected price level. 
C)  only if the federal government's expenditures are greater than its tax receipts. 
D)  whenever imports exceed exports.

Question 13

In August 2016,what percentage of the unemployed had been out of work for least six months?

Accepted Answer

A)  8.3% 
B)  16.4% 
C)  25.5% 
D)  64.7% 
A)  8.3% 
B)  16.4% 
C)  25.5% 
D)  64.7%

Question 14

All of the following have been proposed as explaining the limited effectiveness of monetary policy during and after the financial crisis of 2007-2009 EXCEPT

Accepted Answer

A)  recessions accompanied by financial crises tend to be severe. 
B)  prolonged levels of high unemployment had led to a reduction in the employment-population ratio that would be difficult to reverse. 
C)  the reluctance of the Fed to implement nonconventional policies. 
D)  structural changes as important sectors of the economy were deeply affected by the financial crisis. 
A)  recessions accompanied by financial crises tend to be severe. 
B)  prolonged levels of high unemployment had led to a reduction in the employment-population ratio that would be difficult to reverse. 
C)  the reluctance of the Fed to implement nonconventional policies. 
D)  structural changes as important sectors of the economy were deeply affected by the financial crisis.

Question 15

Suppose a company expects prices in general to rise by 5%,but the price of its product rises by 2%.How will the company respond to the price change?

Accepted Answer

A)  It will increase production since it's getting a higher price for the product. 
B)  It will increase production more slowly since it's price is rising more slowly than average. 
C)  It will reduce production since it perceives a relative decline in the demand for its product. 
D)  It will stop production and shut down until prices rise more quickly. 
A)  It will increase production since it's getting a higher price for the product. 
B)  It will increase production more slowly since it's price is rising more slowly than average. 
C)  It will reduce production since it perceives a relative decline in the demand for its product. 
D)  It will stop production and shut down until prices rise more quickly.

Question 16

How do new Keynesians use menu costs to help explain price stickiness in the short run?

Accepted Answer

New Keynesian economists argue that pric

Question 17

If in the short run prices did not respond at all to changes in aggregate demand,the short-run aggregate supply curve would

Accepted Answer

A)  be vertical. 
B)  be horizontal. 
C)  slope up. 
D)  slope down. 
A)  be vertical. 
B)  be horizontal. 
C)  slope up. 
D)  slope down.

Question 18

Some economists have predicted that recent developments in energy production in the United States are estimated to result in all of the following EXCEPT

Accepted Answer

A)  millions of new jobs. 
B)  the United States having the lowest energy costs of any country in the industrialized world. 
C)  a substantial increase in GDP over time. 
D)  significant increases in pollution. 
A)  millions of new jobs. 
B)  the United States having the lowest energy costs of any country in the industrialized world. 
C)  a substantial increase in GDP over time. 
D)  significant increases in pollution.

Question 19

During the years from 1964 to 1969,inflation increased in the United States

Accepted Answer

A)  when the AD curve shifted to the right, even though the SRAS curve remained stable. 
B)  when the SRAS curve shifted to the left, even though the AD curve remained stable. 
C)  when the AD curve shifted to the right and the SRAS curve shifted up and to the left. 
D)  despite the AD and SRAS curves remaining stable. 
A)  when the AD curve shifted to the right, even though the SRAS curve remained stable. 
B)  when the SRAS curve shifted to the left, even though the AD curve remained stable. 
C)  when the AD curve shifted to the right and the SRAS curve shifted up and to the left. 
D)  despite the AD and SRAS curves remaining stable.

Question 20

Which of the following is most likely to have an impact on the growth of productivity?

Accepted Answer

A)  a decrease in the price level 
B)  a decrease in real money balances 
C)  an increase in the labor supply 
D)  improvements in worker training 
A)  a decrease in the price level 
B)  a decrease in real money balances 
C)  an increase in the labor supply 
D)  improvements in worker training

Which of the following statements is correct?

What does the coefficient a in the new classical expression for short-run aggregate supply represent?

Most economists believe that the aggregate supply curve is

According to Robert Gordon,what led to the decline in unemployment in the 1940s?

Which of the following is NOT a characteristic of competitive markets?

If the economy experiences simultaneous negative aggregate demand and aggregate supply shocks,and the Fed decides to intervene with expansionary policy.Aggregate demand will eventually shift back to the right,which will eventually bring the economy

A shift of the AD curve

Following the recession of 2007-2009,the unemployment rate ________ by October 2009.

If the expected price level increases at the same time that the federal government cuts taxes,in the short run

Why is the short-term nominal interest rate the opportunity cost of holding money?

If oil prices fall at the same time that the federal government increases its purchases,in the short run

According to the new classical view,aggregate output will differ from full-employment output

In August 2016,what percentage of the unemployed had been out of work for least six months?

All of the following have been proposed as explaining the limited effectiveness of monetary policy during and after the financial crisis of 2007-2009 EXCEPT

Suppose a company expects prices in general to rise by 5%,but the price of its product rises by 2%.How will the company respond to the price change?

How do new Keynesians use menu costs to help explain price stickiness in the short run?

If in the short run prices did not respond at all to changes in aggregate demand,the short-run aggregate supply curve would

Some economists have predicted that recent developments in energy production in the United States are estimated to result in all of the following EXCEPT

During the years from 1964 to 1969,inflation increased in the United States

Which of the following is most likely to have an impact on the growth of productivity?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 17: Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Which of the following statements is correct?

What does the coefficient a in the new classical expression for short-run aggregate supply represent?

Most economists believe that the aggregate supply curve is

According to Robert Gordon,what led to the decline in unemployment in the 1940s?

Which of the following is NOT a characteristic of competitive markets?

If the economy experiences simultaneous negative aggregate demand and aggregate supply shocks,and the Fed decides to intervene with expansionary policy.Aggregate demand will eventually shift back to the right,which will eventually bring the economy

A shift of the AD curve

Following the recession of 2007-2009,the unemployment rate ________ by October 2009.

If the expected price level increases at the same time that the federal government cuts taxes,in the short run

Why is the short-term nominal interest rate the opportunity cost of holding money?

If oil prices fall at the same time that the federal government increases its purchases,in the short run

According to the new classical view,aggregate output will differ from full-employment output

In August 2016,what percentage of the unemployed had been out of work for least six months?

All of the following have been proposed as explaining the limited effectiveness of monetary policy during and after the financial crisis of 2007-2009 EXCEPT

Suppose a company expects prices in general to rise by 5%,but the price of its product rises by 2%.How will the company respond to the price change?

How do new Keynesians use menu costs to help explain price stickiness in the short run?

If in the short run prices did not respond at all to changes in aggregate demand,the short-run aggregate supply curve would

Some economists have predicted that recent developments in energy production in the United States are estimated to result in all of the following EXCEPT

During the years from 1964 to 1969,inflation increased in the United States

Which of the following is most likely to have an impact on the growth of productivity?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory Ii: the Is-Mp Model

Filters