Question 1

A decrease in the expected inflation rate 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

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 the amount by which central bankers raise the real interest rate when inflation is one percent per year higher. 
C)  the interest sensitivity of autonomous spending. 
D)  the marginal propensity to export. 
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 the amount by which central bankers raise the real interest rate when inflation is one percent per year higher. 
C)  the interest sensitivity of autonomous spending. 
D)  the marginal propensity to export.

Question 3

When shifts in inflation are clearly related to changes in monetary policy, swift to occur, and large enough to seriously affect profitability,

Accepted Answer

A)  inflation expectations are probably rational. 
B)  inflation expectations are probably static. 
C)  inflation expectations are probably adaptive. 
D)  inflation expectations are probably dynamic. 
A)  inflation expectations are probably rational. 
B)  inflation expectations are probably static. 
C)  inflation expectations are probably adaptive. 
D)  inflation expectations are probably dynamic.

Question 4

The specific form of Okun's law is

Accepted Answer

A)  u - u* = -0.4 x (Y - Y*). 
B)  u - u* = -0.4 x ((Y + Y*)/Y*). 
C)  u - u* = -0.4 x ((Y - Y*)/Y*). 
D)  u + u* = -0.4 x ((Y - Y*)/Y*). 
A)  u - u* = -0.4 x (Y - Y*). 
B)  u - u* = -0.4 x ((Y + Y*)/Y*). 
C)  u - u* = -0.4 x ((Y - Y*)/Y*). 
D)  u + u* = -0.4 x ((Y - Y*)/Y*).

Question 5

When inflation is lower than expected and production is lower than potential output

Accepted Answer

A)  the unemployment rate will be lower than the natural rate of unemployment. 
B)  the unemployment rate will be higher than the natural rate of unemployment. 
C)  the interest rate will be higher than the natural interest rate. 
D)  the exchange rate will be higher than the natural exchange rate. 
A)  the unemployment rate will be lower than the natural rate of unemployment. 
B)  the unemployment rate will be higher than the natural rate of unemployment. 
C)  the interest rate will be higher than the natural interest rate. 
D)  the exchange rate will be higher than the natural exchange rate.

Question 6

Demography is a factor affecting the natural rate of unemployment because

Accepted Answer

A)  where unemployment is located is important. 
B)  teenagers have a lower rate of unemployment than adults, so an economy with a lot of teenagers will have a lower natural rate. 
C)  the experience, skill, and education levels of the labor force will affect the natural rate. 
D)  gender, racial, and ethnic groups tend to have the same rates of unemployment. 
A)  where unemployment is located is important. 
B)  teenagers have a lower rate of unemployment than adults, so an economy with a lot of teenagers will have a lower natural rate. 
C)  the experience, skill, and education levels of the labor force will affect the natural rate. 
D)  gender, racial, and ethnic groups tend to have the same rates of unemployment.

Question 7

Productivity growth is a factor affecting the natural rate of unemployment because

Accepted Answer

A)  increases in productivity results in higher unemployment. 
B)  a slowdown in productivity growth is not always immediately accompanied by a slowdown in real . wage growth, so unemployment rises. 
C)  a slowdown in productivity growth means that more workers are need, so the unemployment decreases. 
D)  productivity growth results in lower wages. 
A)  increases in productivity results in higher unemployment. 
B)  a slowdown in productivity growth is not always immediately accompanied by a slowdown in real . wage growth, so unemployment rises. 
C)  a slowdown in productivity growth means that more workers are need, so the unemployment decreases. 
D)  productivity growth results in lower wages.

Question 8

According to Okun's law,

Accepted Answer

A)  when real GDP is below potential output, unemployment will be relatively low 
B)  when real GDP is below potential output, unemployment will be relatively high. 
C)  when the inflation rate is below the natural inflation rate, unemployment will be relatively low. 
D)  when the inflation rate is below the natural inflation rate, unemployment will be relatively high. 
A)  when real GDP is below potential output, unemployment will be relatively low 
B)  when real GDP is below potential output, unemployment will be relatively high. 
C)  when the inflation rate is below the natural inflation rate, unemployment will be relatively low. 
D)  when the inflation rate is below the natural inflation rate, unemployment will be relatively high.

Question 9

On a graph with the inflation and unemployment rates as the axes, if an expansionary fiscal policy results in a decrease in unemployment with a rightward shift of the Phillips curve,

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 10

The stickier are wages and prices

Accepted Answer

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

A decrease in the expected inflation rate will

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

When shifts in inflation are clearly related to changes in monetary policy, swift to occur, and large enough to seriously affect profitability,

The specific form of Okun's law is

When inflation is lower than expected and production is lower than potential output

Demography is a factor affecting the natural rate of unemployment because

Productivity growth is a factor affecting the natural rate of unemployment because

According to Okun's law,

On a graph with the inflation and unemployment rates as the axes, if an expansionary fiscal policy results in a decrease in unemployment with a rightward shift of the Phillips curve,

The stickier are wages and prices

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 expected inflation rate will

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

When shifts in inflation are clearly related to changes in monetary policy, swift to occur, and large enough to seriously affect profitability,

The specific form of Okun's law is

When inflation is lower than expected and production is lower than potential output

Demography is a factor affecting the natural rate of unemployment because

Productivity growth is a factor affecting the natural rate of unemployment because

According to Okun's law,

On a graph with the inflation and unemployment rates as the axes, if an expansionary fiscal policy results in a decrease in unemployment with a rightward shift of the Phillips curve,

The stickier are wages and prices

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