Question 1

If the economy is fully employed,then the inflationary costs of expansionary policy are likely to be:

Accepted Answer

A)  low, and the unemployment gains minimal. 
B)  low, and the unemployment gains large. 
C)  high, and the unemployment gains minimal. 
D)  high, and the unemployment gains large. 
A)  low, and the unemployment gains minimal. 
B)  low, and the unemployment gains large. 
C)  high, and the unemployment gains minimal. 
D)  high, and the unemployment gains large.

Question 2

With rational expectations,a correctly anticipated policy that would increase AD would lead to:

Accepted Answer

A)  higher inflation and lower unemployment in the short run. 
B)  higher inflation and higher unemployment in the short run. 
C)  higher inflation and no change in unemployment in the short run. 
D)  lower inflation and lower unemployment in the short run. 
A)  higher inflation and lower unemployment in the short run. 
B)  higher inflation and higher unemployment in the short run. 
C)  higher inflation and no change in unemployment in the short run. 
D)  lower inflation and lower unemployment in the short run.

Question 3

Rational expectations theory suggests that government or central bank policies designed to change aggregate demand will be effective.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true?

Accepted Answer

A)  Inflation and unemployment rates can both decrease in the short run in response to negative supply shocks. 
B)  Inflation and unemployment rates cannot both increase or both decrease in the short run in response to changes in aggregate demand. 
C)  Inflation and unemployment rates can both increase in the short run in response to positive supply shocks. 
D)  All of the above are true. 
A)  Inflation and unemployment rates can both decrease in the short run in response to negative supply shocks. 
B)  Inflation and unemployment rates cannot both increase or both decrease in the short run in response to changes in aggregate demand. 
C)  Inflation and unemployment rates can both increase in the short run in response to positive supply shocks. 
D)  All of the above are true.

Question 5

Which of the following would shift the short-run Phillips curve to the right?

Accepted Answer

A)  an negative supply shock 
B)  an increase in inflationary expectations 
C)  a decrease in inflationary expectations 
D)  either (a) or (b). 
A)  an negative supply shock 
B)  an increase in inflationary expectations 
C)  a decrease in inflationary expectations 
D)  either (a) or (b).

Question 6

The intent of indexing is to:

Accepted Answer

A)  reduce inflation gradually. 
B)  shift the long-run Phillips curve to the right. 
C)  take most of the sting out of inflation. 
D)  raise tax revenue automatically during inflation. 
A)  reduce inflation gradually. 
B)  shift the long-run Phillips curve to the right. 
C)  take most of the sting out of inflation. 
D)  raise tax revenue automatically during inflation.

Question 7

If the shifts in AD that will result from policy changes are fully and accurately anticipated,a decrease in government purchases or an increase in taxes would result in which of the following in the short run?

Accepted Answer

A)  a higher level of real output and a higher price level 
B)  a higher level of real output but no change in the price level 
C)  a higher price level and a reduced level of real output 
D)  none of the above. 
A)  a higher level of real output and a higher price level 
B)  a higher level of real output but no change in the price level 
C)  a higher price level and a reduced level of real output 
D)  none of the above.

Question 8

If the level of unemployment is below the natural rate of unemployment,it would be expected that:

Accepted Answer

A)  the short-run Phillips curve will shift leftward, as inflationary expectations adjust. 
B)  the inflation rate will increase. 
C)  the inflation rate will decrease. 
D)  the long-run Phillips curve will shift rightward, as inflationary expectations adjust. 
A)  the short-run Phillips curve will shift leftward, as inflationary expectations adjust. 
B)  the inflation rate will increase. 
C)  the inflation rate will decrease. 
D)  the long-run Phillips curve will shift rightward, as inflationary expectations adjust.

Question 9

According to rational expectations theory:

Accepted Answer

A)  a large reduction in unemployment can be achieved with a relatively small increase in inflation. 
B)  people are not easily fooled by changes in government fiscal policy. 
C)  inflation rates that rise 3 percentage points each year will keep unemployment below its natural rate for a sustained period of time. 
D)  the Phillips curve will slope downward to the right, if people correctly anticipate the inflation rate. 
A)  a large reduction in unemployment can be achieved with a relatively small increase in inflation. 
B)  people are not easily fooled by changes in government fiscal policy. 
C)  inflation rates that rise 3 percentage points each year will keep unemployment below its natural rate for a sustained period of time. 
D)  the Phillips curve will slope downward to the right, if people correctly anticipate the inflation rate.

Question 10

What is the short-run Phillips curve and what observations does it make?

Accepted Answer

The Phillips curve was observed as an in

If the economy is fully employed,then the inflationary costs of expansionary policy are likely to be:

With rational expectations,a correctly anticipated policy that would increase AD would lead to:

Rational expectations theory suggests that government or central bank policies designed to change aggregate demand will be effective.

Which of the following is true?

Which of the following would shift the short-run Phillips curve to the right?

The intent of indexing is to:

If the shifts in AD that will result from policy changes are fully and accurately anticipated,a decrease in government purchases or an increase in taxes would result in which of the following in the short run?

If the level of unemployment is below the natural rate of unemployment,it would be expected that:

According to rational expectations theory:

What is the short-run Phillips curve and what observations does it make?

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

International Trade

International Finance

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Exam 27: Issues in Macroeconomic Theory and Policy

If the economy is fully employed,then the inflationary costs of expansionary policy are likely to be:

With rational expectations,a correctly anticipated policy that would increase AD would lead to:

Rational expectations theory suggests that government or central bank policies designed to change aggregate demand will be effective.

Which of the following is true?

Which of the following would shift the short-run Phillips curve to the right?

The intent of indexing is to:

If the shifts in AD that will result from policy changes are fully and accurately anticipated,a decrease in government purchases or an increase in taxes would result in which of the following in the short run?

If the level of unemployment is below the natural rate of unemployment,it would be expected that:

According to rational expectations theory:

What is the short-run Phillips curve and what observations does it make?

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

International Trade

International Finance

Filters