Question 1

Which of the following is NOT a reason for the weak recovery following the 2007-2009 recession?

Accepted Answer

A)  recessions started by financial crises are almost always severe 
B)  the decline in the automobile industry appeared to be structural 
C)  the collapse of the housing market was long lived 
D)  the recession was caused by a decline in short-run aggregate supply 
A)  recessions started by financial crises are almost always severe 
B)  the decline in the automobile industry appeared to be structural 
C)  the collapse of the housing market was long lived 
D)  the recession was caused by a decline in short-run aggregate supply

Question 2

An expansionary monetary policy that successfully counteracts a recession has the side effect of

Accepted Answer

A)  lower investment spending than if no action had been taken. 
B)  a larger government deficit than if no action had been taken. 
C)  a higher price level than if no action had been taken. 
D)  lower output than if no action had been taken. 
A)  lower investment spending than if no action had been taken. 
B)  a larger government deficit than if no action had been taken. 
C)  a higher price level than if no action had been taken. 
D)  lower output than if no action had been taken.

Question 3

An increase in the expected price level

Accepted Answer

A)  shifts the short-run aggregate supply curve up and to the left. 
B)  shifts the short-run aggregate supply curve down and to the right. 
C)  has no effect on the short-run aggregate supply curve. 
D)  results in a movement along the short-run aggregate supply curve, rather than a shift in the short-run aggregate supply curve. 
A)  shifts the short-run aggregate supply curve up and to the left. 
B)  shifts the short-run aggregate supply curve down and to the right. 
C)  has no effect on the short-run aggregate supply curve. 
D)  results in a movement along the short-run aggregate supply curve, rather than a shift in the short-run aggregate supply curve.

Question 4

Which of the following will NOT shift the aggregate demand curve to the right?

Accepted Answer

A)  a decline in the price level 
B)  an increase in government expenditures 
C)  an increase in investment 
D)  an increase in the money supply 
A)  a decline in the price level 
B)  an increase in government expenditures 
C)  an increase in investment 
D)  an increase in the money supply

Question 5

Make use of the misperceptions theory to explain why the short-run aggregate supply curve is upward sloping.

Accepted Answer

Assume that all prices in an economy ris

Question 6

A shift of the AD curve

Accepted Answer

A)  to the right is considered expansionary, and a shift to the left is considered contractionary. 
B)  to the left is considered expansionary, and a shift to the right is considered contractionary. 
C)  to the right or to the left is considered contractionary. 
D)  to the right or to the left is considered expansionary. 
A)  to the right is considered expansionary, and a shift to the left is considered contractionary. 
B)  to the left is considered expansionary, and a shift to the right is considered contractionary. 
C)  to the right or to the left is considered contractionary. 
D)  to the right or to the left is considered expansionary.

Question 7

Explain what happens to the short-run aggregate supply curve when output exceeds its potential.

Accepted Answer

When output exceeds potential GDP,the hi

Question 8

Explain why some economists claim that the persistence of high unemployment rates during the recovery from the recession of 2007--2009 is evidence of "hysteresis."

Accepted Answer

Some economists believe that large negat

Question 9

According to the new classical view,when the actual price level is greater than the expected price level

Accepted Answer

A)  aggregate output is above the full employment level. 
B)  aggregate output is below the full employment level. 
C)  the aggregate supply curve will slope downward. 
D)  the coefficient a is equal to zero. 
A)  aggregate output is above the full employment level. 
B)  aggregate output is below the full employment level. 
C)  the aggregate supply curve will slope downward. 
D)  the coefficient a is equal to zero.

Question 10

A rise in the real interest rate will cause which of the components of aggregate demand to decline?

Accepted Answer

A)  Only C 
B)  Only C and I 
C)  Only C, I, and NX 
D)  C, I, G, and NX 
A)  Only C 
B)  Only C and I 
C)  Only C, I, and NX 
D)  C, I, G, and NX

Question 11

An increase in all of the following will increase AD EXCEPT

Accepted Answer

A)  investment. 
B)  savings. 
C)  exports. 
D)  government spending. 
A)  investment. 
B)  savings. 
C)  exports. 
D)  government spending.

Question 12

In the long run,the key reason that money is neutral is that

Accepted Answer

A)  the federal budget is balanced. 
B)  prices are flexible. 
C)  business cycles have become much milder. 
D)  the nominal interest rate must equal the real interest rate. 
A)  the federal budget is balanced. 
B)  prices are flexible. 
C)  business cycles have become much milder. 
D)  the nominal interest rate must equal the real interest rate.

Question 13

Which of the following is most likely to have an impact on the growth of productivity?

Accepted Answer

A)  a decrease in the price level 
B)  an increase in government regulation of workplace safety 
C)  an increase in the labor supply 
D)  a decrease in real money balances 
A)  a decrease in the price level 
B)  an increase in government regulation of workplace safety 
C)  an increase in the labor supply 
D)  a decrease in real money balances

Question 14

During the years from 1964 to 1969,inflation increased in the United States

Accepted Answer

A)  when the AD curve shifted up and to the right, even though the SRAS curve remained stable. 
B)  when the SRAS curve shifted up and to the left, even though the AD curve remained stable. 
C)  when the AD curve shifted up and to the right and the SRAS curve shifted up and to the left. 
D)  despite the AD and SRAS curves remaining stable. 
A)  when the AD curve shifted up and to the right, even though the SRAS curve remained stable. 
B)  when the SRAS curve shifted up and to the left, even though the AD curve remained stable. 
C)  when the AD curve shifted up and to the right and the SRAS curve shifted up and to the left. 
D)  despite the AD and SRAS curves remaining stable.

Question 15

How do New Keynesians use the existence of long-term nominal contracts to help explain the failure of prices to adjust in the short run?

Accepted Answer

When contracts of this type exist,firms

Question 16

Everything else being constant,a lower real interest rate

Accepted Answer

A)  increases desired saving and net exports. 
B)  decreases desired saving but increases net exports. 
C)  increases desired saving and investment. 
D)  increases desired investment but decreases net exports. 
A)  increases desired saving and net exports. 
B)  decreases desired saving but increases net exports. 
C)  increases desired saving and investment. 
D)  increases desired investment but decreases net exports.

Question 17

In the aggregate demand-aggregate supply model,if entrepreneurs become convinced that future profitability of capital has increased,

Accepted Answer

A)  current output will fall, but the price level will rise. 
B)  current output will rise, but the price level will fall. 
C)  current output and the price level will both rise. 
D)  current output and the price level will both fall. 
A)  current output will fall, but the price level will rise. 
B)  current output will rise, but the price level will fall. 
C)  current output and the price level will both rise. 
D)  current output and the price level will both fall.

Question 18

What are the principal sources of change in productivity growth?

Accepted Answer

The principal sources of chang

Question 19

If there is a decrease in foreign demand for U.S.goods due to a recession in Europe

Accepted Answer

A)  the U.S. aggregate demand will shift right. 
B)  the U.S. aggregate demand will shift left. 
C)  the U.S. aggregate demand will not be affected. 
D)  the U.S. aggregate demand will become steeper. 
A)  the U.S. aggregate demand will shift right. 
B)  the U.S. aggregate demand will shift left. 
C)  the U.S. aggregate demand will not be affected. 
D)  the U.S. aggregate demand will become steeper.

Question 20

Which of the following expressions is correct?

Accepted Answer

A)  AE = C + I + G - NX. 
B)  AE = C + I + G + NX. 
C)  AE = C + I + (G - T) + NX. 
D)  AE = C + I + (G - T) - NX. 
A)  AE = C + I + G - NX. 
B)  AE = C + I + G + NX. 
C)  AE = C + I + (G - T) + NX. 
D)  AE = C + I + (G - T) - NX.

Which of the following is NOT a reason for the weak recovery following the 2007-2009 recession?

An expansionary monetary policy that successfully counteracts a recession has the side effect of

An increase in the expected price level

Which of the following will NOT shift the aggregate demand curve to the right?

Make use of the misperceptions theory to explain why the short-run aggregate supply curve is upward sloping.

A shift of the AD curve

Explain what happens to the short-run aggregate supply curve when output exceeds its potential.

Explain why some economists claim that the persistence of high unemployment rates during the recovery from the recession of 2007--2009 is evidence of "hysteresis."

According to the new classical view,when the actual price level is greater than the expected price level

A rise in the real interest rate will cause which of the components of aggregate demand to decline?

An increase in all of the following will increase AD EXCEPT

In the long run,the key reason that money is neutral is that

Which of the following is most likely to have an impact on the growth of productivity?

During the years from 1964 to 1969,inflation increased in the United States

How do New Keynesians use the existence of long-term nominal contracts to help explain the failure of prices to adjust in the short run?

Everything else being constant,a lower real interest rate

In the aggregate demand-aggregate supply model,if entrepreneurs become convinced that future profitability of capital has increased,

What are the principal sources of change in productivity growth?

If there is a decrease in foreign demand for U.S.goods due to a recession in Europe

Which of the following expressions is correct?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 17: Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Which of the following is NOT a reason for the weak recovery following the 2007-2009 recession?

An expansionary monetary policy that successfully counteracts a recession has the side effect of

An increase in the expected price level

Which of the following will NOT shift the aggregate demand curve to the right?

Make use of the misperceptions theory to explain why the short-run aggregate supply curve is upward sloping.

A shift of the AD curve

Explain what happens to the short-run aggregate supply curve when output exceeds its potential.

Explain why some economists claim that the persistence of high unemployment rates during the recovery from the recession of 2007--2009 is evidence of "hysteresis."

According to the new classical view,when the actual price level is greater than the expected price level

A rise in the real interest rate will cause which of the components of aggregate demand to decline?

An increase in all of the following will increase AD EXCEPT

In the long run,the key reason that money is neutral is that

Which of the following is most likely to have an impact on the growth of productivity?

During the years from 1964 to 1969,inflation increased in the United States

How do New Keynesians use the existence of long-term nominal contracts to help explain the failure of prices to adjust in the short run?

Everything else being constant,a lower real interest rate

In the aggregate demand-aggregate supply model,if entrepreneurs become convinced that future profitability of capital has increased,

What are the principal sources of change in productivity growth?

If there is a decrease in foreign demand for U.S.goods due to a recession in Europe

Which of the following expressions is correct?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory Ii: the Is-Mp Model

Filters