Question 1

Unanticipated inflation will insure that

Accepted Answer

A) homeowners with outstanding mortgage balances are hurt. 
B) homeowners with outstanding mortgage balances are benefited. 
C) creditors gain,debtors lose. 
D) none of the above 
A) homeowners with outstanding mortgage balances are hurt. 
B) homeowners with outstanding mortgage balances are benefited. 
C) creditors gain,debtors lose. 
D) none of the above

Question 2

If there is a basic surplus but a positive total deficit,then

Accepted Answer

A) interest cost > basic surplus. B) interest cost positive total deficit. D) interest cost < positive total deficit. A) interest cost > basic surplus. B) interest cost positive total deficit. D) interest cost < positive total deficit.

Question 3

When mismatch unemployment characterizes an economy

Accepted Answer

A) monetary and fiscal policies to raise AD are the appropriate government action. 
B) only monetary policy will be effective. 
C) monetary and fiscal policies to raise AD are not the appropriate government action. 
D) only general (not specific)fiscal policy will be effective. 
A) monetary and fiscal policies to raise AD are the appropriate government action. 
B) only monetary policy will be effective. 
C) monetary and fiscal policies to raise AD are not the appropriate government action. 
D) only general (not specific)fiscal policy will be effective.

Question 4

Indexation is designed to

Accepted Answer

A) moderate the costs of inflation,not inflation itself. 
B) rapidly reduce inflation. 
C) reduce the natural rate of unemployment. 
D) rapidly reduce inflationary expectations. 
A) moderate the costs of inflation,not inflation itself. 
B) rapidly reduce inflation. 
C) reduce the natural rate of unemployment. 
D) rapidly reduce inflationary expectations.

Question 5

"Mismatch" unemployment is another name for ________ unemployment.

Accepted Answer

A) frictional 
B) structural 
C) cyclical 
D) natural 
A) frictional 
B) structural 
C) cyclical 
D) natural

Question 6

When the Federal Reserve raises the growth rate of the money supply to a permanently higher level,this produces ________ in real GDP and ________ in the inflation rate.

Accepted Answer

A) a permanent increase,a permanent increase 
B) a permanent increase,a temporary increase 
C) no change,a temporary increase 
D) a temporary increase,a temporary increase 
E) a temporary increase,a permanent increase 
A) a permanent increase,a permanent increase 
B) a permanent increase,a temporary increase 
C) no change,a temporary increase 
D) a temporary increase,a temporary increase 
E) a temporary increase,a permanent increase

Question 7

The payment of subsidies to firms who locate in high unemployment,depressed regions

Accepted Answer

A) is an example of a program to cure job discrimination. 
B) is an example of a program to cure "mismatch unemployment." 
C) has been universally successful in curing unemployment. 
D) is "bribery" and against the law. 
A) is an example of a program to cure job discrimination. 
B) is an example of a program to cure "mismatch unemployment." 
C) has been universally successful in curing unemployment. 
D) is "bribery" and against the law.

Question 8

The best guess has turnover unemployment about ________ as mismatch unemployment.

Accepted Answer

A) three times as large 
B) twice as large 
C) the same size 
D) two-thirds as large 
E) half as large 
A) three times as large 
B) twice as large 
C) the same size 
D) two-thirds as large 
E) half as large

Question 9

Over a year,the money supply in a nation grew by 6 percent,while velocity fell by 1 percent and real GDP rose by 2 percent.This results in an inflation over the year of ________ percent.

Accepted Answer

A) 9 
B) 7 
C) 5 
D) 3 
A) 9 
B) 7 
C) 5 
D) 3

Question 10

Better public education serves to ________ unemployment.

Accepted Answer

A) raise mismatch 
B) lower mismatch 
C) raise turnover 
D) lower turnover 
A) raise mismatch 
B) lower mismatch 
C) raise turnover 
D) lower turnover

Question 11

In nations where conventional taxes are difficult to collect,the inflation tax is ________,which tends to ________ the inflation rates of those nations.

Accepted Answer

A) also difficult to collect,aggravate 
B) also difficult to collect,hold down 
C) a realistic alternative,aggravate 
D) a realistic alternative,hold down 
A) also difficult to collect,aggravate 
B) also difficult to collect,hold down 
C) a realistic alternative,aggravate 
D) a realistic alternative,hold down

Question 12

If the private sector wishes to hold a constant quantity of real government bonds,inflation requires that the private sector continuously ________ those bonds,so that the government ends up having to pay out interest on net equal to the ________ interest rate times the bonds outstanding.

Accepted Answer

A) sell,nominal 
B) sell,real 
C) buy,nominal 
D) buy,real 
A) sell,nominal 
B) sell,real 
C) buy,nominal 
D) buy,real

Question 13

The real rate of interest

Accepted Answer

A) is equal to the nominal rate when Y equals YN. 
B) is equal to the nominal rate minus the rate of inflation. 
C) is equal to the nominal rate plus the rate of inflation. 
D) is never negative. 
A) is equal to the nominal rate when Y equals YN. 
B) is equal to the nominal rate minus the rate of inflation. 
C) is equal to the nominal rate plus the rate of inflation. 
D) is never negative.

Question 14

For inflation to have no real effect on the economy,leaving all decisions and their real outcomes unchanged,five conditions must be met.Which of the following incorrectly states one of those conditions?

Accepted Answer

A) Inflation is universally and accurately anticipated. 
B) All savings earn the nominal interest rate,while money earns zero interest. 
C) Inflation of P₀ percent raises the nominal interest rate by P₀ above the no-inflation nominal rate. 
D) Only real interest income is taxable and only the real cost of borrowing is tax-deductible. 
E) Inflation raises the prices of all goods by the same percentage. 
A) Inflation is universally and accurately anticipated. 
B) All savings earn the nominal interest rate,while money earns zero interest. 
C) Inflation of P₀ percent raises the nominal interest rate by P₀ above the no-inflation nominal rate. 
D) Only real interest income is taxable and only the real cost of borrowing is tax-deductible. 
E) Inflation raises the prices of all goods by the same percentage.

Question 15

When the Fisher Effect holds,a one-percentage-point increase in the long-run money growth rate,because it ________ expected inflation,causes ________ in the nominal interest rate in the long run.

Accepted Answer

A) equally lowers,a one-percentage-point decrease 
B) does not change,a one-percentage point decrease 
C) does not change,no change 
D) equally raises,no change 
E) equally raises,a one-percentage-point increase 
A) equally lowers,a one-percentage-point decrease 
B) does not change,a one-percentage point decrease 
C) does not change,no change 
D) equally raises,no change 
E) equally raises,a one-percentage-point increase

Question 16

The "excess" growth rate of the money supply is the growth rate of money

Accepted Answer

A) plus the long-run growth rate of velocity. 
B) minus the long-run growth rate of velocity. 
C) plus the long-run growth rate of real GDP. 
D) minus the long-run growth rate of real GDP. 
A) plus the long-run growth rate of velocity. 
B) minus the long-run growth rate of velocity. 
C) plus the long-run growth rate of real GDP. 
D) minus the long-run growth rate of real GDP.

Question 17

If an increase in expected inflation equally raises the nominal interest rate,the expected real interest rate ________ and thus investment demand ________.

Accepted Answer

A) rises,increases 
B) rises,decreases 
C) is unchanged,is unchanged 
D) falls,increases 
E) falls,decreases 
A) rises,increases 
B) rises,decreases 
C) is unchanged,is unchanged 
D) falls,increases 
E) falls,decreases

Question 18

Governments promote long-run inflation when they depend on ________ to finance their expenditures.

Accepted Answer

A) issuing bonds 
B) taxation 
C) raising the national debt 
D) money creation 
E) selling off assets 
A) issuing bonds 
B) taxation 
C) raising the national debt 
D) money creation 
E) selling off assets

Question 19

Which of the following statements is true?

Accepted Answer

A) Adult males,adult females,and teenagers all have similar rates of unemployment due to job losses. 
B) Almost half of the total teenage unemployment rate appears to be due to the search for the first job. 
C) Relative to adult males,adult females and teenagers have more frequent unemployment due to reentry and higher quit rates. 
D) All of the above. 
A) Adult males,adult females,and teenagers all have similar rates of unemployment due to job losses. 
B) Almost half of the total teenage unemployment rate appears to be due to the search for the first job. 
C) Relative to adult males,adult females and teenagers have more frequent unemployment due to reentry and higher quit rates. 
D) All of the above.

Question 20

A one percent increase in the unemployment rate is statistically associated with ________ more deaths.

Accepted Answer

A) 37 
B) 370 
C) 3,700 
D) 37,000 
A) 37 
B) 370 
C) 3,700 
D) 37,000

Unanticipated inflation will insure that

If there is a basic surplus but a positive total deficit,then

When mismatch unemployment characterizes an economy

Indexation is designed to

"Mismatch" unemployment is another name for ________ unemployment.

When the Federal Reserve raises the growth rate of the money supply to a permanently higher level,this produces in real GDP and in the inflation rate.

The payment of subsidies to firms who locate in high unemployment,depressed regions

The best guess has turnover unemployment about ________ as mismatch unemployment.

Over a year,the money supply in a nation grew by 6 percent,while velocity fell by 1 percent and real GDP rose by 2 percent.This results in an inflation over the year of ________ percent.

Better public education serves to ________ unemployment.

In nations where conventional taxes are difficult to collect,the inflation tax is ,which tends to the inflation rates of those nations.

If the private sector wishes to hold a constant quantity of real government bonds,inflation requires that the private sector continuously those bonds,so that the government ends up having to pay out interest on net equal to the interest rate times the bonds outstanding.

The real rate of interest

For inflation to have no real effect on the economy,leaving all decisions and their real outcomes unchanged,five conditions must be met.Which of the following incorrectly states one of those conditions?

When the Fisher Effect holds,a one-percentage-point increase in the long-run money growth rate,because it expected inflation,causes in the nominal interest rate in the long run.

The "excess" growth rate of the money supply is the growth rate of money

If an increase in expected inflation equally raises the nominal interest rate,the expected real interest rate and thus investment demand .

Governments promote long-run inflation when they depend on ________ to finance their expenditures.

Which of the following statements is true?

A one percent increase in the unemployment rate is statistically associated with ________ more deaths.

What Is Macroeconomics

The Measurement of Income,prices,and Unemployment

Income and Interest Rates: the Keynesian Cross Model and the Is Curve

Strong and Weak Policy Effects in the Is-Lm Model

Financial Markets, financial Regulation, and Economic Instability

The Government Budget, the Government Debt, and the Limitations of Fiscal Policy

International Trade, exchange Rates, and Macroeconomic Policy

Aggregate Demand, aggregate Supply, and the Great Depression

Inflation: Its Causes and Cures

The Theory of Economic Growth

The Big Questions of Economic Growth

Money,banks,and the Federal Reserve

The Goals, tools, and Rules of Monetary Policy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro and New Keynesian Macro

Conclusion: Where We Stand

Filters

Exam 10: The Goals of Stabilization Policy: Low Inflation and Low Unemployment

Unanticipated inflation will insure that

If there is a basic surplus but a positive total deficit,then

When mismatch unemployment characterizes an economy

Indexation is designed to

"Mismatch" unemployment is another name for ________ unemployment.

When the Federal Reserve raises the growth rate of the money supply to a permanently higher level,this produces ________ in real GDP and ________ in the inflation rate.

The payment of subsidies to firms who locate in high unemployment,depressed regions

The best guess has turnover unemployment about ________ as mismatch unemployment.

Over a year,the money supply in a nation grew by 6 percent,while velocity fell by 1 percent and real GDP rose by 2 percent.This results in an inflation over the year of ________ percent.

Better public education serves to ________ unemployment.

In nations where conventional taxes are difficult to collect,the inflation tax is ________,which tends to ________ the inflation rates of those nations.

If the private sector wishes to hold a constant quantity of real government bonds,inflation requires that the private sector continuously ________ those bonds,so that the government ends up having to pay out interest on net equal to the ________ interest rate times the bonds outstanding.

The real rate of interest

For inflation to have no real effect on the economy,leaving all decisions and their real outcomes unchanged,five conditions must be met.Which of the following incorrectly states one of those conditions?

When the Fisher Effect holds,a one-percentage-point increase in the long-run money growth rate,because it ________ expected inflation,causes ________ in the nominal interest rate in the long run.

The "excess" growth rate of the money supply is the growth rate of money

If an increase in expected inflation equally raises the nominal interest rate,the expected real interest rate ________ and thus investment demand ________.

Governments promote long-run inflation when they depend on ________ to finance their expenditures.

Which of the following statements is true?

A one percent increase in the unemployment rate is statistically associated with ________ more deaths.

What Is Macroeconomics

The Measurement of Income,prices,and Unemployment

Income and Interest Rates: the Keynesian Cross Model and the Is Curve

Strong and Weak Policy Effects in the Is-Lm Model

Financial Markets, financial Regulation, and Economic Instability

The Government Budget, the Government Debt, and the Limitations of Fiscal Policy

International Trade, exchange Rates, and Macroeconomic Policy

Aggregate Demand, aggregate Supply, and the Great Depression

Inflation: Its Causes and Cures

The Theory of Economic Growth

The Big Questions of Economic Growth

Money,banks,and the Federal Reserve

The Goals, tools, and Rules of Monetary Policy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro and New Keynesian Macro

Conclusion: Where We Stand

Filters

When the Federal Reserve raises the growth rate of the money supply to a permanently higher level,this produces in real GDP and in the inflation rate.

In nations where conventional taxes are difficult to collect,the inflation tax is ,which tends to the inflation rates of those nations.

If the private sector wishes to hold a constant quantity of real government bonds,inflation requires that the private sector continuously those bonds,so that the government ends up having to pay out interest on net equal to the interest rate times the bonds outstanding.

When the Fisher Effect holds,a one-percentage-point increase in the long-run money growth rate,because it expected inflation,causes in the nominal interest rate in the long run.

If an increase in expected inflation equally raises the nominal interest rate,the expected real interest rate and thus investment demand .