Question 1

A temporary adverse productivity shock would

Accepted Answer

A) shift the labor supply curve upward. 
B) decrease the level of employment. 
C) decrease future income. 
D) decrease the expected future marginal product of capital. 
A) shift the labor supply curve upward. 
B) decrease the level of employment. 
C) decrease future income. 
D) decrease the expected future marginal product of capital.

Question 2

Define real shocks,define nominal shocks,and give an example of each.

Accepted Answer

Real shocks are changes that disturb lab

Question 3

According to the misperceptions theory,short-lived shocks may have long-term effects on the economy because of

Accepted Answer

A) multiplier effects. 
B) propagation mechanisms. 
C) accelerator effects. 
D) automatic stabilizers. 
A) multiplier effects. 
B) propagation mechanisms. 
C) accelerator effects. 
D) automatic stabilizers.

Question 4

You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following except

Accepted Answer

A) large gold discoveries that increased the money supply preceded an economic boom. 
B) a change in monetary institutions preceded a boom or recession. 
C) a change in the leadership of the Fed and its policy was followed by noticeable changes in the money supply and a recession or inflation. 
D) the fact that every recession was preceded by a drop in the money supply. 
A) large gold discoveries that increased the money supply preceded an economic boom. 
B) a change in monetary institutions preceded a boom or recession. 
C) a change in the leadership of the Fed and its policy was followed by noticeable changes in the money supply and a recession or inflation. 
D) the fact that every recession was preceded by a drop in the money supply.

Question 5

When RBC economists work out a detailed numerical example of a more general theory,they are performing

Accepted Answer

A) econometrics. 
B) number theory. 
C) calibration. 
D) topology. 
A) econometrics. 
B) number theory. 
C) calibration. 
D) topology.

Question 6

According to classical economists,the increase in unemployment in recessions is caused by

Accepted Answer

A) slack aggregate demand. 
B) the failure of wages to adjust to restore equilibrium in the labor market. 
C) the power of labor unions, which prevent firms from cutting wages. 
D) a mismatch of workers and jobs. 
A) slack aggregate demand. 
B) the failure of wages to adjust to restore equilibrium in the labor market. 
C) the power of labor unions, which prevent firms from cutting wages. 
D) a mismatch of workers and jobs.

Question 7

The formula Y / (KaN1-a)provides a calculation of

Accepted Answer

A) x-efficiency. 
B) dynamic efficiency. 
C) economywide monopoly power. 
D) the Solow residual. 
A) x-efficiency. 
B) dynamic efficiency. 
C) economywide monopoly power. 
D) the Solow residual.

Question 8

According to the misperceptions theory,when P e,output is ________ its full-employment level and the short-run aggregate supply curve must shift ________ to restore full employment.

Accepted Answer

A) below; upward 
B) below; downward 
C) above; upward 
D) above; downward 
A) below; upward 
B) below; downward 
C) above; upward 
D) above; downward

Question 9

According to classical economists,unemployment rises in recessions due to an increase in ________ unemployment,not ________ unemployment.

Accepted Answer

A) cyclical; frictional and structural 
B) frictional and cyclical; structural 
C) structural; frictional and cyclical 
D) frictional and structural; cyclical 
A) cyclical; frictional and structural 
B) frictional and cyclical; structural 
C) structural; frictional and cyclical 
D) frictional and structural; cyclical

Question 10

Reverse causation is the idea that

Accepted Answer

A) current increases in output cause future increases in the money supply. 
B) current increases in the money supply cause future increases in output. 
C) expected future increases in the money supply cause increases in current output. 
D) expected future increases in output cause increases in the current money supply. 
A) current increases in output cause future increases in the money supply. 
B) current increases in the money supply cause future increases in output. 
C) expected future increases in the money supply cause increases in current output. 
D) expected future increases in output cause increases in the current money supply.

Question 11

An adverse supply shock would directly ________ labor productivity by changing the amount of output that can be produced with any given amount of capital and labor.It would also indirectly ________ average labor productivity through changes in the level of employment.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 12

The main avenue by which a temporary change in government purchases in the classical model affects the labor supply is by

Accepted Answer

A) changing the population. 
B) affecting the value of the stock market. 
C) increasing business confidence. 
D) affecting workers' wealth. 
A) changing the population. 
B) affecting the value of the stock market. 
C) increasing business confidence. 
D) affecting workers' wealth.

Question 13

Friedman and Schwarz argue that money is not neutral because

Accepted Answer

A) theoretical models of the economy don't show monetary neutrality. 
B) money is a leading, procyclical variable. 
C) they found several historical incidents in which changes in the money supply were not responses to macroeconomic conditions, and output moved in the same direction as money. 
D) they found no evidence that productivity changes or changes in government spending contributed to business cycles; only monetary changes preceded every recession. 
A) theoretical models of the economy don't show monetary neutrality. 
B) money is a leading, procyclical variable. 
C) they found several historical incidents in which changes in the money supply were not responses to macroeconomic conditions, and output moved in the same direction as money. 
D) they found no evidence that productivity changes or changes in government spending contributed to business cycles; only monetary changes preceded every recession.

Question 14

Labor hoarding occurs when

Accepted Answer

A) firms keep good workers so other firms can't hire them. 
B) the unemployment rate exceeds the natural rate of unemployment. 
C) involuntary unemployment exceeds voluntary unemployment. 
D) because of hiring and firing costs, firms retain workers in a recession that they would otherwise lay off. 
A) firms keep good workers so other firms can't hire them. 
B) the unemployment rate exceeds the natural rate of unemployment. 
C) involuntary unemployment exceeds voluntary unemployment. 
D) because of hiring and firing costs, firms retain workers in a recession that they would otherwise lay off.

Question 15

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift ________ to restore general equilibrium; as it does so,the price level ________.

Accepted Answer

A) downward; rises 
B) downward; falls 
C) upward; rises 
D) upward; falls 
A) downward; rises 
B) downward; falls 
C) upward; rises 
D) upward; falls

Question 16

Why do many economists believe that money affects output? What is the empirical evidence in support of that belief?

Accepted Answer

Except for the classical (RBC)model of t

Question 17

If producers believe that the increase in their relative prices is large relative to the increase in the general price level,then the slope of the short-run aggregate supply curve will be

Accepted Answer

A) infinite. 
B) small. 
C) large. 
D) negative. 
A) infinite. 
B) small. 
C) large. 
D) negative.

Question 18

Which of the following is an example of a productivity shock?

Accepted Answer

A) The introduction of new management techniques 
B) A change in taxes on corporate profits 
C) A change in the level of government transfer programs 
D) An increase in the money supply 
A) The introduction of new management techniques 
B) A change in taxes on corporate profits 
C) A change in the level of government transfer programs 
D) An increase in the money supply

Question 19

Which of the following equations is most likely to represent short-run aggregate supply according to the misperceptions theory?

Accepted Answer

A) Y = 6000 
B) Y = 6000 + 50(P - Pe) 
C) P = 2 
D) PY = 12,000 
A) Y = 6000 
B) Y = 6000 + 50(P - Pe) 
C) P = 2 
D) PY = 12,000

Question 20

A temporary beneficial productivity shock would

Accepted Answer

A) shift the labor supply curve down and to the right. 
B) increase the level of employment. 
C) increase future income. 
D) increase the expected future marginal product of capital. 
A) shift the labor supply curve down and to the right. 
B) increase the level of employment. 
C) increase future income. 
D) increase the expected future marginal product of capital.

A temporary adverse productivity shock would

Define real shocks,define nominal shocks,and give an example of each.

According to the misperceptions theory,short-lived shocks may have long-term effects on the economy because of

You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following except

When RBC economists work out a detailed numerical example of a more general theory,they are performing

According to classical economists,the increase in unemployment in recessions is caused by

The formula Y / (K^aN¹^-a)provides a calculation of

According to the misperceptions theory,when P < P^e,output is its full-employment level and the short-run aggregate supply curve must shift to restore full employment.

According to classical economists,unemployment rises in recessions due to an increase in unemployment,not unemployment.

Reverse causation is the idea that

An adverse supply shock would directly labor productivity by changing the amount of output that can be produced with any given amount of capital and labor.It would also indirectly average labor productivity through changes in the level of employment.

The main avenue by which a temporary change in government purchases in the classical model affects the labor supply is by

Friedman and Schwarz argue that money is not neutral because

Labor hoarding occurs when

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift to restore general equilibrium; as it does so,the price level .

Why do many economists believe that money affects output? What is the empirical evidence in support of that belief?

If producers believe that the increase in their relative prices is large relative to the increase in the general price level,then the slope of the short-run aggregate supply curve will be

Which of the following is an example of a productivity shock?

Which of the following equations is most likely to represent short-run aggregate supply according to the misperceptions theory?

A temporary beneficial productivity shock would

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 10: Classical Business Cycle Analysis

A temporary adverse productivity shock would

Define real shocks,define nominal shocks,and give an example of each.

According to the misperceptions theory,short-lived shocks may have long-term effects on the economy because of

You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following except

When RBC economists work out a detailed numerical example of a more general theory,they are performing

According to classical economists,the increase in unemployment in recessions is caused by

The formula Y / (KaN1-a)provides a calculation of

According to the misperceptions theory,when P < Pe,output is ________ its full-employment level and the short-run aggregate supply curve must shift ________ to restore full employment.

According to classical economists,unemployment rises in recessions due to an increase in ________ unemployment,not ________ unemployment.

Reverse causation is the idea that

An adverse supply shock would directly ________ labor productivity by changing the amount of output that can be produced with any given amount of capital and labor.It would also indirectly ________ average labor productivity through changes in the level of employment.

The main avenue by which a temporary change in government purchases in the classical model affects the labor supply is by

Friedman and Schwarz argue that money is not neutral because

Labor hoarding occurs when

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift ________ to restore general equilibrium; as it does so,the price level ________.

Why do many economists believe that money affects output? What is the empirical evidence in support of that belief?

If producers believe that the increase in their relative prices is large relative to the increase in the general price level,then the slope of the short-run aggregate supply curve will be

Which of the following is an example of a productivity shock?

Which of the following equations is most likely to represent short-run aggregate supply according to the misperceptions theory?

A temporary beneficial productivity shock would

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

The formula Y / (K^aN¹^-a)provides a calculation of

According to the misperceptions theory,when P < P^e,output is its full-employment level and the short-run aggregate supply curve must shift to restore full employment.

According to classical economists,unemployment rises in recessions due to an increase in unemployment,not unemployment.

An adverse supply shock would directly labor productivity by changing the amount of output that can be produced with any given amount of capital and labor.It would also indirectly average labor productivity through changes in the level of employment.

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift to restore general equilibrium; as it does so,the price level .