Question 1

An increase in oil prices will

Accepted Answer

A)  shift the short-run aggregate supply curve up and to the left. 
B)  shift the short-run aggregate supply curve down and to the right. 
C)  cause a movement along the short-run aggregate supply curve. 
D)  not affect the short-run aggregate supply curve. 
A)  shift the short-run aggregate supply curve up and to the left. 
B)  shift the short-run aggregate supply curve down and to the right. 
C)  cause a movement along the short-run aggregate supply curve. 
D)  not affect the short-run aggregate supply curve.

Question 2

Economists who are skeptical of hysteresis in Europe cite all of the following as reasons for persistently high unemployment in Europe EXCEPT

Accepted Answer

A)  generous unemployment benefits. 
B)  restrictions on firms' ability to hire and fire workers. 
C)  the existence of an ongoing recession. 
D)  high tax rates. 
A)  generous unemployment benefits. 
B)  restrictions on firms' ability to hire and fire workers. 
C)  the existence of an ongoing recession. 
D)  high tax rates.

Question 3

Which of the following was NOT cited as contributing to unusual uncertainty having an adverse effect on aggregate supply?

Accepted Answer

A)  the possibility that Congress may let the 2001, 2003 tax cuts to expire 
B)  the Fed's limited use of monetary policy in fighting the recession 
C)  the severity of the financial crisis 
D)  concern that the Affordable Care act would increase the cost of hiring workers 
A)  the possibility that Congress may let the 2001, 2003 tax cuts to expire 
B)  the Fed's limited use of monetary policy in fighting the recession 
C)  the severity of the financial crisis 
D)  concern that the Affordable Care act would increase the cost of hiring workers

Question 4

Between 1992 and the 2000s,Poland experienced

Accepted Answer

A)  strong economic growth, but increasing inflation. 
B)  weak economic growth, but falling inflation. 
C)  strong economic growth and falling inflation. 
D)  weak economic growth and increasing inflation. 
A)  strong economic growth, but increasing inflation. 
B)  weak economic growth, but falling inflation. 
C)  strong economic growth and falling inflation. 
D)  weak economic growth and increasing inflation.

Question 5

Stabilization policy refers to attempts to

Accepted Answer

A)  shift the AD curve to smooth short-run fluctuations in output. 
B)  shift the SRAS curve to smooth short-run fluctuations in output. 
C)  shift the AD curve to keep the price level as low as possible. 
D)  shift the SRAS curve to keep the nominal interest rate as low as possible. 
A)  shift the AD curve to smooth short-run fluctuations in output. 
B)  shift the SRAS curve to smooth short-run fluctuations in output. 
C)  shift the AD curve to keep the price level as low as possible. 
D)  shift the SRAS curve to keep the nominal interest rate as low as possible.

Question 6

How does an increase in interest rates affect net exports?

Accepted Answer

A higher domestic interest rate makes re

Question 7

Economists generally agree that in the long run changes in aggregate demand affect

Accepted Answer

A)  aggregate output but not the price level. 
B)  the price level but not aggregate output. 
C)  both the price level and aggregate output. 
D)  neither the price level nor aggregate output. 
A)  aggregate output but not the price level. 
B)  the price level but not aggregate output. 
C)  both the price level and aggregate output. 
D)  neither the price level nor aggregate output.

Question 8

An important difference between the new classical and new Keynesians views is that new classicals

Accepted Answer

A)  assume that all firms are price takers, but new Keynesians assume that some firms are price setters. 
B)  take into account the existence of long-term nominal wage and price contracts, but new Keynesians do not believe they are important. 
C)  focus on the importance of investment spending, but new Keynesians believe that government spending is more important. 
D)  believe that the aggregate supply curve is horizontal, even in the short run, but new Keynesians believe that the aggregate supply curve slopes upward in the short run. 
A)  assume that all firms are price takers, but new Keynesians assume that some firms are price setters. 
B)  take into account the existence of long-term nominal wage and price contracts, but new Keynesians do not believe they are important. 
C)  focus on the importance of investment spending, but new Keynesians believe that government spending is more important. 
D)  believe that the aggregate supply curve is horizontal, even in the short run, but new Keynesians believe that the aggregate supply curve slopes upward in the short run.

Question 9

Which of the following statements is correct?

Accepted Answer

A)  New classicals believe that the aggregate supply curve is vertical in the short run. 
B)  New Keynesians believe that the aggregate supply curve is vertical in the short run. 
C)  New Keynesians believe that the aggregate supply curve slopes upward in the long run. 
D)  New classicals believe that the aggregate supply curve slopes upward in the short run. 
A)  New classicals believe that the aggregate supply curve is vertical in the short run. 
B)  New Keynesians believe that the aggregate supply curve is vertical in the short run. 
C)  New Keynesians believe that the aggregate supply curve slopes upward in the long run. 
D)  New classicals believe that the aggregate supply curve slopes upward in the short run.

Question 10

If there is a decrease in the expected future profitability of capital,

Accepted Answer

A)  the aggregate demand curve will shift right. 
B)  the aggregate demand curve will shift left. 
C)  the aggregate demand curve will become steeper. 
D)  the aggregate demand curve will be unaffected. 
A)  the aggregate demand curve will shift right. 
B)  the aggregate demand curve will shift left. 
C)  the aggregate demand curve will become steeper. 
D)  the aggregate demand curve will be unaffected.

Question 11

What does the coefficient a in the new classical expression for short-run aggregate supply represent?

Accepted Answer

A)  the full employment level of output 
B)  the price level in the previous period 
C)  how much output responds when the actual price level differs from the expected price level 
D)  how much the price level responds when the actual level of output differs from the full employment level of output 
A)  the full employment level of output 
B)  the price level in the previous period 
C)  how much output responds when the actual price level differs from the expected price level 
D)  how much the price level responds when the actual level of output differs from the full employment level of output

Question 12

Which of the following statements concerning stabilization policy is correct?

Accepted Answer

A)  Increasing government spending during an economic boom would be an example of a stabilization policy. 
B)  Increasing taxes during a recession would be an example of a stabilization policy. 
C)  New Keynesian economists are skeptical of the value of stabilization policies. 
D)  Increasing the money supply during a recession is an example of a stabilization policy. 
A)  Increasing government spending during an economic boom would be an example of a stabilization policy. 
B)  Increasing taxes during a recession would be an example of a stabilization policy. 
C)  New Keynesian economists are skeptical of the value of stabilization policies. 
D)  Increasing the money supply during a recession is an example of a stabilization policy.

Question 13

In which of the following markets is a producer likely to be a price taker?

Accepted Answer

A)  the apple market 
B)  the automobile market 
C)  the steel market 
D)  the college textbook market 
A)  the apple market 
B)  the automobile market 
C)  the steel market 
D)  the college textbook market

Question 14

The aggregate supply curve represents levels of output that producers are willing to sell at

Accepted Answer

A)  each level of the real interest rate. 
B)  each level of real GDP. 
C)  each price level. 
D)  each inflation rate. 
A)  each level of the real interest rate. 
B)  each level of real GDP. 
C)  each price level. 
D)  each inflation rate.

Question 15

Suppose that many households look to the stock market to gauge how the economy is likely to perform in the future.When stock prices are rising,then households will be optimistic about the future state of the economy and will increase their spending on houses and consumer durables,such as cars and furniture.When stock prices are falling,then households will be pessimistic about the future and will cut back on their spending.If this view of the link between stock prices and household spending is correct,then what will be the effect of a decline in stock prices on output in the new Keynesian view? Be sure to distinguish the short run from the long run.

Accepted Answer

The fall in stock prices will reduce hou

Question 16

The key concept in the new classical approach to the aggregate supply curve is

Accepted Answer

A)  the impact of imperfect information on business decisions. 
B)  the impact of changes in the price level on real balances. 
C)  the inverse relationship between the real interest rate and desired investment spending. 
D)  the crowding out of investment spending by government spending. 
A)  the impact of imperfect information on business decisions. 
B)  the impact of changes in the price level on real balances. 
C)  the inverse relationship between the real interest rate and desired investment spending. 
D)  the crowding out of investment spending by government spending.

Question 17

The Federal Reserve pursued an expansionary monetary policy during 1964 in order to

Accepted Answer

A)  pull the United States out of a deep recession. 
B)  counteract the effects of a deep cut in federal income taxes. 
C)  keep interest rates from rising. 
D)  bring down the inflation rate. 
A)  pull the United States out of a deep recession. 
B)  counteract the effects of a deep cut in federal income taxes. 
C)  keep interest rates from rising. 
D)  bring down the inflation rate.

Question 18

Why are many economists skeptical of the Fed's ability to fine tune the economy?

Accepted Answer

A)  monetary policy only affects output in the long run 
B)  lags in policy make it difficult to properly time policy 
C)  fiscal policy can be implemented more quickly than monetary policy 
D)  monetary policy does not have any effect on output 
A)  monetary policy only affects output in the long run 
B)  lags in policy make it difficult to properly time policy 
C)  fiscal policy can be implemented more quickly than monetary policy 
D)  monetary policy does not have any effect on output

Question 19

Most economists believe that changes in the price level have

Accepted Answer

A)  no effect on the quantity of output supplied in either the short run or the long run. 
B)  an effect on the quantity of output supplied in the short run, but not in the long run. 
C)  an effect on the quantity of output supplied in the long run, but not in the short run. 
D)  an effect on the quantity of output supplied in both the short run and the long run. 
A)  no effect on the quantity of output supplied in either the short run or the long run. 
B)  an effect on the quantity of output supplied in the short run, but not in the long run. 
C)  an effect on the quantity of output supplied in the long run, but not in the short run. 
D)  an effect on the quantity of output supplied in both the short run and the long run.

Question 20

When output exceeds its full-employment level,

Accepted Answer

A)  the short-run aggregate supply function shifts up. 
B)  wages fall. 
C)  the short-run aggregate supply function shifts down. 
D)  aggregate supply exceeds aggregate demand. 
A)  the short-run aggregate supply function shifts up. 
B)  wages fall. 
C)  the short-run aggregate supply function shifts down. 
D)  aggregate supply exceeds aggregate demand.

An increase in oil prices will

Economists who are skeptical of hysteresis in Europe cite all of the following as reasons for persistently high unemployment in Europe EXCEPT

Which of the following was NOT cited as contributing to unusual uncertainty having an adverse effect on aggregate supply?

Between 1992 and the 2000s,Poland experienced

Stabilization policy refers to attempts to

How does an increase in interest rates affect net exports?

Economists generally agree that in the long run changes in aggregate demand affect

An important difference between the new classical and new Keynesians views is that new classicals

Which of the following statements is correct?

If there is a decrease in the expected future profitability of capital,

What does the coefficient a in the new classical expression for short-run aggregate supply represent?

Which of the following statements concerning stabilization policy is correct?

In which of the following markets is a producer likely to be a price taker?

The aggregate supply curve represents levels of output that producers are willing to sell at

The key concept in the new classical approach to the aggregate supply curve is

The Federal Reserve pursued an expansionary monetary policy during 1964 in order to

Why are many economists skeptical of the Fed's ability to fine tune the economy?

Most economists believe that changes in the price level have

When output exceeds its full-employment level,

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

An increase in oil prices will

Economists who are skeptical of hysteresis in Europe cite all of the following as reasons for persistently high unemployment in Europe EXCEPT

Which of the following was NOT cited as contributing to unusual uncertainty having an adverse effect on aggregate supply?

Between 1992 and the 2000s,Poland experienced

Stabilization policy refers to attempts to

How does an increase in interest rates affect net exports?

Economists generally agree that in the long run changes in aggregate demand affect

An important difference between the new classical and new Keynesians views is that new classicals

Which of the following statements is correct?

If there is a decrease in the expected future profitability of capital,

What does the coefficient a in the new classical expression for short-run aggregate supply represent?

Which of the following statements concerning stabilization policy is correct?

In which of the following markets is a producer likely to be a price taker?

The aggregate supply curve represents levels of output that producers are willing to sell at

The key concept in the new classical approach to the aggregate supply curve is

The Federal Reserve pursued an expansionary monetary policy during 1964 in order to

Why are many economists skeptical of the Fed's ability to fine tune the economy?

Most economists believe that changes in the price level have

When output exceeds its full-employment level,

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