Question 1

A decrease in the natural rate of unemployment will

Accepted Answer

A)  result in a decrease in the inflation rate along the Phillips curve. 
B)  shift the Phillips curve to the right. 
C)  shift the Phillips curve to the left. 
D)  result in an increase in the inflation rate along the Phillips curve. 
A)  result in a decrease in the inflation rate along the Phillips curve. 
B)  shift the Phillips curve to the right. 
C)  shift the Phillips curve to the left. 
D)  result in an increase in the inflation rate along the Phillips curve.

Question 2

Rational expectations of inflation prevail when people

Accepted Answer

A)  ignore the fact that inflation can change. 
B)  assume that future inflation will be like recent past inflation. 
C)  feel that inflation is rational. 
D)  use all the information they have as best they can. 
A)  ignore the fact that inflation can change. 
B)  assume that future inflation will be like recent past inflation. 
C)  feel that inflation is rational. 
D)  use all the information they have as best they can.

Question 3

An increase in the natural rate of unemployment will

Accepted Answer

A)  result in a decrease in the inflation rate along the Phillips curve. 
B)  shift the Phillips curve to the right. 
C)  shift the Phillips curve to the left. 
D)  result in an increase in the inflation rate along the Phillips curve. 
A)  result in a decrease in the inflation rate along the Phillips curve. 
B)  shift the Phillips curve to the right. 
C)  shift the Phillips curve to the left. 
D)  result in an increase in the inflation rate along the Phillips curve.

Question 4

The questions with which Chapter 12 is concerned include each of the following except

Accepted Answer

A)  how do we connect the sticky-price model with the flexible price model? 
B)  how has the potential output changed in the United States over the past couple of generations? 
C)  what can shift the Phillips curve? 
D)  what does it mean for expectations of inflation to be static? Adaptive? Rational? 
A)  how do we connect the sticky-price model with the flexible price model? 
B)  how has the potential output changed in the United States over the past couple of generations? 
C)  what can shift the Phillips curve? 
D)  what does it mean for expectations of inflation to be static? Adaptive? Rational?

Question 5

If inflation expectations are rationally formed,

Accepted Answer

A)  the Phillips curve is essentially horizontal. 
B)  the monetary policy reaction function is essentially horizontal. 
C)  the Phillips curve is essentially vertical. 
D)  the monetary policy reaction function is essential vertical. 
A)  the Phillips curve is essentially horizontal. 
B)  the monetary policy reaction function is essentially horizontal. 
C)  the Phillips curve is essentially vertical. 
D)  the monetary policy reaction function is essential vertical.

Question 6

The position of the monetary policy reaction function depends on

Accepted Answer

A)  the natural rate of unemployment. 
B)  the value of the inflation rate when the central bank has set the real interest rate at the "normal" baseline value r0. 
C)  the value of the unemployment rate when the central bank has set the real interest rate at the "normal" baseline value r0. 
D)  the value of the total output growth rate when the central bank has set the real interest rate at the "normal" baseline value r0.. 
A)  the natural rate of unemployment. 
B)  the value of the inflation rate when the central bank has set the real interest rate at the "normal" baseline value r0. 
C)  the value of the unemployment rate when the central bank has set the real interest rate at the "normal" baseline value r0. 
D)  the value of the total output growth rate when the central bank has set the real interest rate at the "normal" baseline value r0..

Question 7

If inflation increases under conditions of static expectations of inflation,

Accepted Answer

A)  the Phillips curve will shift to the right, further exacerbating the inflation problem. 
B)  the Phillips curve will shift to the left, improving the inflation-unemployment situation. 
C)  the Phillips curve will remain in place and unemployment will decrease. 
D)  the monetary policy reaction function will shift to the right. 
A)  the Phillips curve will shift to the right, further exacerbating the inflation problem. 
B)  the Phillips curve will shift to the left, improving the inflation-unemployment situation. 
C)  the Phillips curve will remain in place and unemployment will decrease. 
D)  the monetary policy reaction function will shift to the right.

Question 8

If inflation increases and last year's inflation is expected to be this year's inflation,

Accepted Answer

A)  the Phillips curve will shift to the right, further exacerbating the inflation problem. 
B)  the Phillips curve will shift to the left, improving the inflation-unemployment situation. 
C)  the Phillips curve will remain in place and unemployment will decrease. 
D)  the monetary policy reaction function will shift to the right. 
A)  the Phillips curve will shift to the right, further exacerbating the inflation problem. 
B)  the Phillips curve will shift to the left, improving the inflation-unemployment situation. 
C)  the Phillips curve will remain in place and unemployment will decrease. 
D)  the monetary policy reaction function will shift to the right.

Question 9

The questions with which Chapter 12 is concerned include each of the following except

Accepted Answer

A)  how do we connect the sticky-price model with the flexible price model? 
B)  how has the natural rate of unemployment changed in the United States over the past couple of generations? 
C)  what can shift the Phillips curve? 
D)  how can we tell how expectations of money supply changes are formed? 
A)  how do we connect the sticky-price model with the flexible price model? 
B)  how has the natural rate of unemployment changed in the United States over the past couple of generations? 
C)  what can shift the Phillips curve? 
D)  how can we tell how expectations of money supply changes are formed?

Question 10

If inflation expectations are rational,

Accepted Answer

A)  the economy's reaction to a demand-side shock is the same as in the fixed-price model; that is, the output and employment levels change, not prices. 
B)  the economy's reaction to a demand-side shock is the same as in the flexible-price model; that is, prices adjust to keep the economy at its potential output level. 
C)  the economy's reaction to a demand-side shock is a combination of output and price adjustments in the short-run and eventual price adjustments in the long-run.. 
D)  there can never be a change in output and employment. 
A)  the economy's reaction to a demand-side shock is the same as in the fixed-price model; that is, the output and employment levels change, not prices. 
B)  the economy's reaction to a demand-side shock is the same as in the flexible-price model; that is, prices adjust to keep the economy at its potential output level. 
C)  the economy's reaction to a demand-side shock is a combination of output and price adjustments in the short-run and eventual price adjustments in the long-run.. 
D)  there can never be a change in output and employment.

Question 11

Each of the following is a factor in the parameter     of the monetary reaction function except

Accepted Answer

A)  how much the central bank raises the real interest rate in response to a rise in inflation. 
B)  the slope of the Phillips curve. 
C)  the slope of the IS curve. 
D)  the coefficient of Okun's law. 
A)  how much the central bank raises the real interest rate in response to a rise in inflation. 
B)  the slope of the Phillips curve. 
C)  the slope of the IS curve. 
D)  the coefficient of Okun's law.

Question 12

The parameter     (which governs the slope of the monetary policy reaction function) is determined by each of the following except

Accepted Answer

A)  the term from Okun's law which tells us the change in the unemployment rate produced by a one percent change in real GDP relative to potential output. 
B)  the term which tells us how quickly the economy reacts to a supply shock. 
C)  the interest sensitivity of autonomous spending. 
D)  the multiplier. 
A)  the term from Okun's law which tells us the change in the unemployment rate produced by a one percent change in real GDP relative to potential output. 
B)  the term which tells us how quickly the economy reacts to a supply shock. 
C)  the interest sensitivity of autonomous spending. 
D)  the multiplier.

Question 13

If inflation expectations are static,

Accepted Answer

A)  the economy's reaction to a demand-side shock is the same as in the fixed-price model; that is, the output and employment levels change, not prices. 
B)  the economy's reaction to a demand-side shock is the same as in the flexible-price model; that is, prices adjust to keep the economy at its potential output level. 
C)  the economy's reaction to a demand-side shock is a combination of output and price adjustments in the short-run and eventual price adjustments in the long-run.. 
D)  there can never be a change in output and employment. 
A)  the economy's reaction to a demand-side shock is the same as in the fixed-price model; that is, the output and employment levels change, not prices. 
B)  the economy's reaction to a demand-side shock is the same as in the flexible-price model; that is, prices adjust to keep the economy at its potential output level. 
C)  the economy's reaction to a demand-side shock is a combination of output and price adjustments in the short-run and eventual price adjustments in the long-run.. 
D)  there can never be a change in output and employment.

Question 14

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Accepted Answer

A)  the slope of the Phillips curve. 
B)  the expected rate of inflation. 
C)  the natural real interest rate. 
D)  the slope of the monetary policy reaction function. 
A)  the slope of the Phillips curve. 
B)  the expected rate of inflation. 
C)  the natural real interest rate. 
D)  the slope of the monetary policy reaction function.

Question 15

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Accepted Answer

A)  the level of unemployment when the interest rate is at what the central bank thinks of as its long-run average rate. 
B)  the expected rate of inflation. 
C)  the slope of the monetary policy reaction function. 
D)  the natural level of output. 
A)  the level of unemployment when the interest rate is at what the central bank thinks of as its long-run average rate. 
B)  the expected rate of inflation. 
C)  the slope of the monetary policy reaction function. 
D)  the natural level of output.

Question 16

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Accepted Answer

A)  the natural level of the interest rate. 
B)  the central bank's target level of inflation. 
C)  whether there are any supply shocks affecting inflation. 
D)  the slope of the monetary policy reaction function. 
A)  the natural level of the interest rate. 
B)  the central bank's target level of inflation. 
C)  whether there are any supply shocks affecting inflation. 
D)  the slope of the monetary policy reaction function.

Question 17

The specific form of Okun's law relates

Accepted Answer

A)  deviations from the natural level of employment to deviations from potential output. 
B)  deviations from the natural level of the unemployment rate to deviations from the potential inflation rate. 
C)  deviations from the natural rate of unemployment to deviations from potential output. 
D)  deviations from the natural interest to deviations from the natural exchange rate. 
A)  deviations from the natural level of employment to deviations from potential output. 
B)  deviations from the natural level of the unemployment rate to deviations from the potential inflation rate. 
C)  deviations from the natural rate of unemployment to deviations from potential output. 
D)  deviations from the natural interest to deviations from the natural exchange rate.

Question 18

On a graph with the inflation and unemployment rates as the axes, if an expansionary fiscal policy results in no decrease in unemployment,

Accepted Answer

A)  inflation expectations must be static. 
B)  inflation expectations must be adaptive. 
C)  inflation expectations must be dynamic. 
D)  inflation expectations must be rational. 
A)  inflation expectations must be static. 
B)  inflation expectations must be adaptive. 
C)  inflation expectations must be dynamic. 
D)  inflation expectations must be rational.

Question 19

The Taylor rule equation for the real interest rate is

Accepted Answer

A)  r0 - rB   
B)  r0 + rB   
C)  r0 + rB   
D)  r0 - rB   
A)  r0 - rB   
B)  r0 + rB   
C)  r0 + rB   
D)  r0 - rB

Question 20

If wages and prices are completely flexible

Accepted Answer

A)  the Phillips curve will be horizontal. 
B)  the IS curve will be vertical. 
C)  the LM curve will be horizontal. 
D)  the Phillips curve will be vertical. 
A)  the Phillips curve will be horizontal. 
B)  the IS curve will be vertical. 
C)  the LM curve will be horizontal. 
D)  the Phillips curve will be vertical.

A decrease in the natural rate of unemployment will

Rational expectations of inflation prevail when people

An increase in the natural rate of unemployment will

The questions with which Chapter 12 is concerned include each of the following except

If inflation expectations are rationally formed,

The position of the monetary policy reaction function depends on

If inflation increases under conditions of static expectations of inflation,

If inflation increases and last year's inflation is expected to be this year's inflation,

The questions with which Chapter 12 is concerned include each of the following except

If inflation expectations are rational,

Each of the following is a factor in the parameter of the monetary reaction function except

The parameter (which governs the slope of the monetary policy reaction function) is determined by each of the following except

If inflation expectations are static,

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

The specific form of Okun's law relates

On a graph with the inflation and unemployment rates as the axes, if an expansionary fiscal policy results in no decrease in unemployment,

The Taylor rule equation for the real interest rate is

If wages and prices are completely flexible

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

Exam 12: The Phillips Curve, Expectations, and Monetary Policy

A decrease in the natural rate of unemployment will

Rational expectations of inflation prevail when people

An increase in the natural rate of unemployment will

The questions with which Chapter 12 is concerned include each of the following except

If inflation expectations are rationally formed,

The position of the monetary policy reaction function depends on

If inflation increases under conditions of static expectations of inflation,

If inflation increases and last year's inflation is expected to be this year's inflation,

The questions with which Chapter 12 is concerned include each of the following except

If inflation expectations are rational,

Each of the following is a factor in the parameter of the monetary reaction function except

The parameter (which governs the slope of the monetary policy reaction function) is determined by each of the following except

If inflation expectations are static,

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

The specific form of Okun's law relates

On a graph with the inflation and unemployment rates as the axes, if an expansionary fiscal policy results in no decrease in unemployment,

The Taylor rule equation for the real interest rate is

If wages and prices are completely flexible

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters