Question 1

A characteristic of long-run equilibrium is, the economy is producing its potential output.This is:

Accepted Answer

A) The maximum level of output the economy could produce at any time 
B) The level of output the economy produces when its resources are used at normal rates 
C) Defined as using 80 percent of the economy's resources at any time 
D) The level of output consistent with an unemployment rate of 7.5% 
A) The maximum level of output the economy could produce at any time 
B) The level of output the economy produces when its resources are used at normal rates 
C) Defined as using 80 percent of the economy's resources at any time 
D) The level of output consistent with an unemployment rate of 7.5%

Question 2

If output and inflation are unrelated in the long run, the long-run aggregate supply curve must be:

Accepted Answer

A) Horizontal 
B) Vertical 
C) Upward sloping 
D) Non-existent 
A) Horizontal 
B) Vertical 
C) Upward sloping 
D) Non-existent

Question 3

Explain the impact on the monetary policy reaction curve and the nominal interest rate if the level of government purchases were to decrease and the central bank does not change its inflation target?

Accepted Answer

The monetary policy reaction curve would

Question 4

A rightward shift in the dynamic aggregate demand curve could result from:

Accepted Answer

A) A decrease in government purchases 
B) An increase in investment resulting from a lower inflation rate 
C) A rightward shift of the monetary policy reaction curve 
D) A leftward shift of the monetary policy reaction curve 
A) A decrease in government purchases 
B) An increase in investment resulting from a lower inflation rate 
C) A rightward shift of the monetary policy reaction curve 
D) A leftward shift of the monetary policy reaction curve

Question 5

If the economy's current level of output rises above its potential level of output, the short-run aggregate supply curve will:

Accepted Answer

A) Shift right 
B) Shift left 
C) Become horizontal 
D) Become vertical 
A) Shift right 
B) Shift left 
C) Become horizontal 
D) Become vertical

Question 6

When the monetary policymakers raise the target inflation rate they:

Accepted Answer

A) Raise the current real inflation rate at every level of current inflation 
B) Lower the current real interest rate at every level of current inflation 
C) In effect shift the monetary policy reaction curve to the left 
D) In effect move up along the current monetary policy reaction curve 
A) Raise the current real inflation rate at every level of current inflation 
B) Lower the current real interest rate at every level of current inflation 
C) In effect shift the monetary policy reaction curve to the left 
D) In effect move up along the current monetary policy reaction curve

Question 7

The Fed hopes to impact short-run inflation and output by altering:

Accepted Answer

A) The production function 
B) Aggregate supply 
C) Aggregate demand 
D) Fiscal policy 
A) The production function 
B) Aggregate supply 
C) Aggregate demand 
D) Fiscal policy

A characteristic of long-run equilibrium is, the economy is producing its potential output.This is:

If output and inflation are unrelated in the long run, the long-run aggregate supply curve must be:

Explain the impact on the monetary policy reaction curve and the nominal interest rate if the level of government purchases were to decrease and the central bank does not change its inflation target?

A rightward shift in the dynamic aggregate demand curve could result from:

If the economy's current level of output rises above its potential level of output, the short-run aggregate supply curve will:

When the monetary policymakers raise the target inflation rate they:

The Fed hopes to impact short-run inflation and output by altering:

An Introduction to Money and the Financial System

Money and the Payments System

Financial Instruments, Financial Markets, and Financial Institutions

Future Value, Present Value, and Interest Rates

Understanding Risk

Bonds, Bond Prices, and the Determination of Interest Rates

The Risk and Term Structure of Interest Rates

Stocks, Stock Markets, and Market Efficiency

Derivatives: Futures, Options, and Swaps

Foreign Exchange

The Economics of Financial Intermediation

Depository Institutions: Banks and Bank Management

Financial Industry Structure

Regulating the Financial System

Central Banks in the World Today

The Structure of Central Banks: the Federal Reserve and the European Central Bank

The Central Bank Balance Sheet and the Money Supply Process

Monetary Policy: Stabilizing the Domestic Economy

Exchange-Rate Policy and the Central Bank

Money Growth, Money Demand, and Modern Monetary Policy

Understanding Business Cycle Fluctuations

Modern Monetary Policy and the Challenges Facing Central Bankers

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Exam 21: Output, Inflation, and Monetary Policy

A characteristic of long-run equilibrium is, the economy is producing its potential output.This is:

If output and inflation are unrelated in the long run, the long-run aggregate supply curve must be:

Explain the impact on the monetary policy reaction curve and the nominal interest rate if the level of government purchases were to decrease and the central bank does not change its inflation target?

A rightward shift in the dynamic aggregate demand curve could result from:

If the economy's current level of output rises above its potential level of output, the short-run aggregate supply curve will:

When the monetary policymakers raise the target inflation rate they:

The Fed hopes to impact short-run inflation and output by altering:

An Introduction to Money and the Financial System

Money and the Payments System

Financial Instruments, Financial Markets, and Financial Institutions

Future Value, Present Value, and Interest Rates

Understanding Risk

Bonds, Bond Prices, and the Determination of Interest Rates

The Risk and Term Structure of Interest Rates

Stocks, Stock Markets, and Market Efficiency

Derivatives: Futures, Options, and Swaps

Foreign Exchange

The Economics of Financial Intermediation

Depository Institutions: Banks and Bank Management

Financial Industry Structure

Regulating the Financial System

Central Banks in the World Today

The Structure of Central Banks: the Federal Reserve and the European Central Bank

The Central Bank Balance Sheet and the Money Supply Process

Monetary Policy: Stabilizing the Domestic Economy

Exchange-Rate Policy and the Central Bank

Money Growth, Money Demand, and Modern Monetary Policy

Understanding Business Cycle Fluctuations

Modern Monetary Policy and the Challenges Facing Central Bankers

Filters