Question 1

An increase in planned investment expenditures is a short-term economic "shock."

Accepted Answer

A) True 
 B)False

Question 2

Defining  
As current output,  
As potential output,and  
As short-run fluctuations,which of the following equations does the text use to measure the fluctuations component of output?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 3

Defining Yt as current output,   
as potential output,and   
as short-run fluctuations,the equation   
is defined as the percentage deviation of current output from potential output.

Accepted Answer

A) True 
 B)False

Question 4

Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade.However,monetary policymakers are slow to recognize that the change is to potential,not current,output and interpret the decrease in output as a recession that leads current output to fall below potential output.In this scenario,policymakers believe that recessionary pressures are building and incorrectly respond by increasing interest rates,sending the economy into a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 5

According to Okun's law,if the Federal Reserve wants to increase unemployment,it should __________ interest rates,which would __________ output.

Accepted Answer

A) increase;increase 
B) increase;reduce 
C) reduce;reduce 
D) reduce;not change 
E) not change;increase 
A) increase;increase 
B) increase;reduce 
C) reduce;reduce 
D) reduce;not change 
E) not change;increase

Question 6

When current output rises above potential output,we hire fewer workers,which reduces the costs of production.The change in inflation will be negative.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not an example of a short term macroeconomic "shock"?

Accepted Answer

A) a drought 
B) high unemployment 
C) increased military spending 
D) a change in the tax code 
E) political unrest 
A) a drought 
B) high unemployment 
C) increased military spending 
D) a change in the tax code 
E) political unrest

Question 8

-Consider the Phillips curve at  
,2 in Figure 9.3.

Accepted Answer

A) The economy is booming. 
B) The economy is inflationary. 
C) The economy is in recession. 
D) The economy is at potential output. 
E) Not enough information is given to determine. 
A) The economy is booming. 
B) The economy is inflationary. 
C) The economy is in recession. 
D) The economy is at potential output. 
E) Not enough information is given to determine.

Question 9

The long-run model determines __________ and __________.

Accepted Answer

A) current output;unemployment. 
B) potential output;unemployment. 
C) current output;long-run inflation 
D) potential output;unemployment 
E) potential output;long-run inflation 
A) current output;unemployment. 
B) potential output;unemployment. 
C) current output;long-run inflation 
D) potential output;unemployment 
E) potential output;long-run inflation

Question 10

Defining  
As current output,  
As potential output,and  
As short-run fluctuations,which of the following equations is correct?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 11

According to the Phillips curve,short-term changes in inflation are due to

Accepted Answer

A) changes in interest rates. 
B) changes in unemployment. 
C) changes in short-term output fluctuations. 
D) changes in long-term inflation. 
E) changes in long-term output. 
A) changes in interest rates. 
B) changes in unemployment. 
C) changes in short-term output fluctuations. 
D) changes in long-term inflation. 
E) changes in long-term output.

Question 12

What is the best definition of the short term in the short-term model?

Accepted Answer

A) about two years 
B) There is no such thing as the short term. 
C) the length of time for short-term deviations to return to their long-run values 
D) the length of a recession 
E) the amount of time the economy spends at its potential output 
A) about two years 
B) There is no such thing as the short term. 
C) the length of time for short-term deviations to return to their long-run values 
D) the length of a recession 
E) the amount of time the economy spends at its potential output

Question 13

Taken together,the Phillips curve and Okun's law imply there is a short-term __________ relationship between __________ and inflation.

Accepted Answer

A) positive;interest rates 
B) positive;unemployment 
C) negative;interest rates 
D) negative;unemployment 
E) Not enough information is given. 
A) positive;interest rates 
B) positive;unemployment 
C) negative;interest rates 
D) negative;unemployment 
E) Not enough information is given.

Question 14

According to the Phillips curve presented in the text,a positive macroeconomic shock:

Accepted Answer

A) increases the rate of inflation. 
B) decreases the rate of inflation. 
C) has no effect on the rate of inflation. 
D) has a negative effect on the unemployment rate. 
E) has a positive effect on the unemployment rate. 
A) increases the rate of inflation. 
B) decreases the rate of inflation. 
C) has no effect on the rate of inflation. 
D) has a negative effect on the unemployment rate. 
E) has a positive effect on the unemployment rate.

Question 15

If  
,the macroeconomy is:

Accepted Answer

A) in an expansion. 
B) at its potential level of output. 
C) in a recession. 
D) none of the above 
E) Not enough information is given. 
A) in an expansion. 
B) at its potential level of output. 
C) in a recession. 
D) none of the above 
E) Not enough information is given.

Question 16

What three premises does the short-run model operate under?

Accepted Answer

The three premises are:
(a)the economy i

An increase in planned investment expenditures is a short-term economic "shock."

Defining As current output, As potential output,and As short-run fluctuations,which of the following equations does the text use to measure the fluctuations component of output?

Defining Yt as current output, as potential output,and as short-run fluctuations,the equation is defined as the percentage deviation of current output from potential output.

According to Okun's law,if the Federal Reserve wants to increase unemployment,it should interest rates,which would output.

When current output rises above potential output,we hire fewer workers,which reduces the costs of production.The change in inflation will be negative.

Which of the following is not an example of a short term macroeconomic "shock"?

-Consider the Phillips curve at ,2 in Figure 9.3.

The long-run model determines and .

Defining As current output, As potential output,and As short-run fluctuations,which of the following equations is correct?

According to the Phillips curve,short-term changes in inflation are due to

What is the best definition of the short term in the short-term model?

Taken together,the Phillips curve and Okun's law imply there is a short-term relationship between and inflation.

According to the Phillips curve presented in the text,a positive macroeconomic shock:

If ,the macroeconomy is:

What three premises does the short-run model operate under?

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 9: An Introduction to the Short Run

An increase in planned investment expenditures is a short-term economic "shock."

Defining As current output, As potential output,and As short-run fluctuations,which of the following equations does the text use to measure the fluctuations component of output?

Defining Yt as current output, as potential output,and as short-run fluctuations,the equation is defined as the percentage deviation of current output from potential output.

According to Okun's law,if the Federal Reserve wants to increase unemployment,it should __________ interest rates,which would __________ output.

When current output rises above potential output,we hire fewer workers,which reduces the costs of production.The change in inflation will be negative.

Which of the following is not an example of a short term macroeconomic "shock"?

-Consider the Phillips curve at ,2 in Figure 9.3.

The long-run model determines __________ and __________.

Defining As current output, As potential output,and As short-run fluctuations,which of the following equations is correct?

According to the Phillips curve,short-term changes in inflation are due to

What is the best definition of the short term in the short-term model?

Taken together,the Phillips curve and Okun's law imply there is a short-term __________ relationship between __________ and inflation.

According to the Phillips curve presented in the text,a positive macroeconomic shock:

If ,the macroeconomy is:

What three premises does the short-run model operate under?

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

According to Okun's law,if the Federal Reserve wants to increase unemployment,it should interest rates,which would output.

The long-run model determines and .

Taken together,the Phillips curve and Okun's law imply there is a short-term relationship between and inflation.