Exam 16: Stabilization in an Integrated World Economy

The natural rate of unemployment is

According to the real business cycle theory, an increase in an input price, such as oil, will

Active policy making would include all of the following EXCEPT

The stickiness of wages and prices will cause

Cyclical unemployment is

Empirical evidence suggests that, when unemployment benefits run out, the probability that an unemployed person will find a job

The rational expectations hypothesis is based on all the following assumptions EXCEPT

Based on the work of economist A.W. Phillips, economists concluded that

In the short run, unanticipated inflation typically leads to

According to New Keynesian economists

The hypothesis suggesting that people combine the effects of past policy changes on economic variables with their own judgment about the future effects of current and future economic policy is referred to as the

Those who favor passive policy making argue that all of the following exist EXCEPT

Expansionary fiscal policy can be used to reduce unemployment by

From 1950 until the late 1980s, the natural rate of unemployment in the United States

The idea that anticipated monetary policy changes cannot affect real GDP or employment is known as

An example of nondiscretionary policy making is

-In the above figure, if initial equilibrium is at point A and if there is an unanticipated increase in aggregate demand from AD₁ to AD₂, then

-In the above figure, suppose the economy is initially at a short-run equilibrium at point D and there is an unanticipated increase in the money supply. Which point represents the new short-run equilibrium?

Which of the following statements has been proposed as a benefit of passive policy making?

According to New Keynesians, a reduction in which of the following will tend to cause the inflation rate to decrease?