Question 1

The Phillips curve indicates that when the labor market is ________,production costs will ________ and aggregate supply increases.

Accepted Answer

A) easy;rise 
B) easy;fall 
C) tight;fall 
D) tight;rise 
A) easy;rise 
B) easy;fall 
C) tight;fall 
D) tight;rise

Question 2

Everything else held constant,if workers expect an increase in inflation,________ aggregate supply ________.

Accepted Answer

A) long-run;increases 
B) long-run;decreases 
C) short-run;decreases 
D) short-run;increases 
A) long-run;increases 
B) long-run;decreases 
C) short-run;decreases 
D) short-run;increases

Question 3

A positive supply shock causes ________ to ________.

Accepted Answer

A) aggregate demand;increase 
B) aggregate demand;decrease 
C) short-run aggregate supply;decrease 
D) short-run aggregate supply;increase 
A) aggregate demand;increase 
B) aggregate demand;decrease 
C) short-run aggregate supply;decrease 
D) short-run aggregate supply;increase

Question 4

An autonomous monetary policy easing ________ real interest rates and ________ output in the short run,thereby ________ stock prices.

Accepted Answer

A) raises;lowers;lowering 
B) raises;raises;raising 
C) lowers;raises;raising 
D) lowers;raises;lowering 
A) raises;lowers;lowering 
B) raises;raises;raising 
C) lowers;raises;raising 
D) lowers;raises;lowering

Question 5

The fact that an economy always returns to the natural rate level of output is known as

Accepted Answer

A) the excess demand hypothesis. 
B) the price-adjustment mechanism. 
C) the self-correcting mechanism. 
D) the natural rate of unemployment. 
A) the excess demand hypothesis. 
B) the price-adjustment mechanism. 
C) the self-correcting mechanism. 
D) the natural rate of unemployment.

Question 6

Everything else held constant,which of the following does NOT cause aggregate demand to increase?

Accepted Answer

A) an increase in net exports 
B) an increase in government spending 
C) an increase in taxes 
D) an increase in consumer optimism 
A) an increase in net exports 
B) an increase in government spending 
C) an increase in taxes 
D) an increase in consumer optimism

Question 7

Which of the followings is NOT true about the word "autonomous" that economists use?

Accepted Answer

A) Changes in autonomous components are associated with movements along a curve. 
B) Changes in autonomous components are associated with shifts of a curve. 
C) The autonomous component of a variable is exogenous. 
D) The autonomous component of a variable is independent of other variables in the model. 
A) Changes in autonomous components are associated with movements along a curve. 
B) Changes in autonomous components are associated with shifts of a curve. 
C) The autonomous component of a variable is exogenous. 
D) The autonomous component of a variable is independent of other variables in the model.

Question 8

Assuming the economy is starting at the natural rate of output and everything else held constant,the effect of ________ in aggregate ________ is a rise in both inflation and output in the short-run,but in the long-run the only effect is a rise in inflation.

Accepted Answer

A) a decrease;supply 
B) a decrease;demand 
C) an increase;supply 
D) an increase;demand 
A) a decrease;supply 
B) a decrease;demand 
C) an increase;supply 
D) an increase;demand

Question 9

With downward-sloping monetary policy and IS curves,the aggregate demand curve is

Accepted Answer

A) downward sloping. 
B) flat. 
C) vertical. 
D) upward sloping. 
A) downward sloping. 
B) flat. 
C) vertical. 
D) upward sloping.

Question 10

According to aggregate demand and supply analysis,the negative supply shocks of 1973-1975 and 1978-1980 had the effect of

Accepted Answer

A) increasing aggregate output,lowering unemployment,and raising the inflation. 
B) decreasing aggregate output,raising unemployment,and raising the inflation. 
C) increasing aggregate output,raising unemployment,and raising the inflation. 
D) decreasing aggregate output,raising unemployment,and lowering the inflation. 
A) increasing aggregate output,lowering unemployment,and raising the inflation. 
B) decreasing aggregate output,raising unemployment,and raising the inflation. 
C) increasing aggregate output,raising unemployment,and raising the inflation. 
D) decreasing aggregate output,raising unemployment,and lowering the inflation.

Question 11

Monetary policy authorities can affect real interest rates

Accepted Answer

A) in the short run,but not in the long run. 
B) in the long run,but not in the short run. 
C) permanently. 
D) both in the long run and the short run. 
A) in the short run,but not in the long run. 
B) in the long run,but not in the short run. 
C) permanently. 
D) both in the long run and the short run.

Question 12

positive spending shocks lead to ________ real interest rates ________.

Accepted Answer

A) higher;in both the short and long runs 
B) higher;in the short run but not in the long run 
C) lower;in both the short and long runs 
D) lower;in the short run but not in the long run 
A) higher;in both the short and long runs 
B) higher;in the short run but not in the long run 
C) lower;in both the short and long runs 
D) lower;in the short run but not in the long run

Question 13

A temporary supply shock that raises prices

Accepted Answer

A) will cause the real interest rate to rise in the long run. 
B) has no long-run impact on inflation and output. 
C) causes output to fall in the long run. 
D) causes inflation to rise in the long run. 
A) will cause the real interest rate to rise in the long run. 
B) has no long-run impact on inflation and output. 
C) causes output to fall in the long run. 
D) causes inflation to rise in the long run.

Question 14

Everything else held constant,an autonomous monetary policy tightening ________ aggregate ________.

Accepted Answer

A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply 
A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply

Question 15

By analyzing aggregate demand through its component parts,we can conclude that,everything else held constant,a decline in the inflation rate causes

Accepted Answer

A) an increase in real interest rates,an increase in investment spending,and a decline in aggregate output demand. 
B) a decline in real interest rates,a decrease in investment spending,and an increase in aggregate output demand. 
C) a decline in real interest rates,an increase in investment spending,and an increase in aggregate output demand. 
D) an increase in real interest rates,a decline in investment spending,and a decline in aggregate output demand. 
A) an increase in real interest rates,an increase in investment spending,and a decline in aggregate output demand. 
B) a decline in real interest rates,a decrease in investment spending,and an increase in aggregate output demand. 
C) a decline in real interest rates,an increase in investment spending,and an increase in aggregate output demand. 
D) an increase in real interest rates,a decline in investment spending,and a decline in aggregate output demand.

Question 16

Everything else held constant,an increase in planned investment expenditure ________ aggregate ________.

Accepted Answer

A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply 
A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply

Question 17

Everything else held constant,an increase in net taxes ________ aggregate ________.

Accepted Answer

A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply 
A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply

Question 18

The lon-run aggregate supply curve can be expressed by

Accepted Answer

A) output as a function of potential output. 
B) inflation as a function of past inflation. 
C) inflation as a function of past inflation and output gap. 
D) output as a function of inflation and output gap. 
A) output as a function of potential output. 
B) inflation as a function of past inflation. 
C) inflation as a function of past inflation and output gap. 
D) output as a function of inflation and output gap.

Question 19

Everything else held constant,an increase in net exports ________ aggregate ________.

Accepted Answer

A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply 
A) increases;demand 
B) decreases;demand 
C) decreases;supply 
D) increases;supply

Question 20

Which of the following increases aggregate supply in the short-run,everything else held constant?

Accepted Answer

A) an increase in the price of crude oil 
B) a successful wage push by workers 
C) expectations of a higher inflation 
D) a technological improvement that increases worker productivity 
A) an increase in the price of crude oil 
B) a successful wage push by workers 
C) expectations of a higher inflation 
D) a technological improvement that increases worker productivity

Exam 22: Aggregate Demand and Supply Analysis

The Phillips curve indicates that when the labor market is ________,production costs will ________ and aggregate supply increases.

Everything else held constant,if workers expect an increase in inflation,________ aggregate supply ________.

A positive supply shock causes ________ to ________.

An autonomous monetary policy easing ________ real interest rates and ________ output in the short run,thereby ________ stock prices.

The fact that an economy always returns to the natural rate level of output is known as

Everything else held constant,which of the following does NOT cause aggregate demand to increase?

Which of the followings is NOT true about the word "autonomous" that economists use?

Assuming the economy is starting at the natural rate of output and everything else held constant,the effect of ________ in aggregate ________ is a rise in both inflation and output in the short-run,but in the long-run the only effect is a rise in inflation.

With downward-sloping monetary policy and IS curves,the aggregate demand curve is

According to aggregate demand and supply analysis,the negative supply shocks of 1973-1975 and 1978-1980 had the effect of

Monetary policy authorities can affect real interest rates

positive spending shocks lead to ________ real interest rates ________.

A temporary supply shock that raises prices

Everything else held constant,an autonomous monetary policy tightening ________ aggregate ________.

By analyzing aggregate demand through its component parts,we can conclude that,everything else held constant,a decline in the inflation rate causes

Everything else held constant,an increase in planned investment expenditure ________ aggregate ________.

Everything else held constant,an increase in net taxes ________ aggregate ________.

The lon-run aggregate supply curve can be expressed by

Everything else held constant,an increase in net exports ________ aggregate ________.

Which of the following increases aggregate supply in the short-run,everything else held constant?

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Web 1:financial Crises in Emerging Market Economies

Web 2:the Islm Model

Web 3:nonbank Finance

Web 4:financial Derivatives

Web 5:conflicts of Interest in the Financial Services Industry

Filters

The Phillips curve indicates that when the labor market is ,production costs will and aggregate supply increases.

Everything else held constant,if workers expect an increase in inflation, aggregate supply .

A positive supply shock causes to .

An autonomous monetary policy easing real interest rates and output in the short run,thereby stock prices.

Assuming the economy is starting at the natural rate of output and everything else held constant,the effect of in aggregate is a rise in both inflation and output in the short-run,but in the long-run the only effect is a rise in inflation.

positive spending shocks lead to real interest rates .

Everything else held constant,an autonomous monetary policy tightening aggregate .

Everything else held constant,an increase in planned investment expenditure aggregate .

Everything else held constant,an increase in net taxes aggregate .

Everything else held constant,an increase in net exports aggregate .