Question 1

The economywide rate of inflation is given by:

Accepted Answer

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

Question 2

The Phillips curve assumes inflation expectations are rational.

Accepted Answer

A) True 
 B)False

Question 3

The structure of the short-run model is best described as which of the following?

Accepted Answer

A) Nominal interest rate   Real interest rate
  Shortrun output
  Change in inflation 
B) Nominal interest rate   Real interest rate
  Change in inflation 
C) Nominal interest rate   Short-run output
  Change in inflation 
D) Real interest rate   Short-run output
  Change in inflation
  Nominal interest rate 
E) Short-run output   Change in inflation
  Real interest rate
  Nominal interest rate 
A) Nominal interest rate   Real interest rate
  Shortrun output
  Change in inflation 
B) Nominal interest rate   Real interest rate
  Change in inflation 
C) Nominal interest rate   Short-run output
  Change in inflation 
D) Real interest rate   Short-run output
  Change in inflation
  Nominal interest rate 
E) Short-run output   Change in inflation
  Real interest rate
  Nominal interest rate

Question 4

When the Federal Reserve increases the interest rate,the MP curve shifts up and potential output falls.

Accepted Answer

A) True 
 B)False

Question 5

The MP curve stands for __________ and describes __________.

Accepted Answer

A) monopoly pricing;how firms set prices 
B) monetary policy;how the Federal Reserve sets the inflation rate 
C) monetary policy;how the federal government sets short-run output fluctuations 
D) money-prices;how the Federal Reserve sets the inflation rate 
E) monetary policy;how the Federal Reserve sets the real interest rate 
A) monopoly pricing;how firms set prices 
B) monetary policy;how the Federal Reserve sets the inflation rate 
C) monetary policy;how the federal government sets short-run output fluctuations 
D) money-prices;how the Federal Reserve sets the inflation rate 
E) monetary policy;how the Federal Reserve sets the real interest rate

Question 6

According to the Phillips curve,if current output is above potential output,

Accepted Answer

A) inflation falls. 
B) inflation rises. 
C) unemployment falls. 
D) inflation is constant. 
E) tax rates rise. 
A) inflation falls. 
B) inflation rises. 
C) unemployment falls. 
D) inflation is constant. 
E) tax rates rise.

Question 7

-Explain how misunderstanding potential real GDP can lead to the wrong monetary policy.

Accepted Answer

Consider Figure 12.13.In this case the F

Question 8

Firms alter their prices based on:

Accepted Answer

A) expected inflation. 
B) expected inflation and supply conditions. 
C) expected inflation and demand conditions. 
D) demand conditions. 
E) the previous period's aggregate supply. 
A) expected inflation. 
B) expected inflation and supply conditions. 
C) expected inflation and demand conditions. 
D) demand conditions. 
E) the previous period's aggregate supply.

Question 9

What is the main policy tool available to the Federal Reserve?

Accepted Answer

A) discount rate 
B) federal funds rate 
C) government expenditures 
D) printing money 
E) taxes 
A) discount rate 
B) federal funds rate 
C) government expenditures 
D) printing money 
E) taxes

Question 10

-Starting at any equilibrium in Figure 12.11,if the Fed tightens money,the money market would move from:

Accepted Answer

A) point C to A. 
B) point B to D. 
C) point B to C. 
D) point A to D. 
E) Not enough information is given. 
A) point C to A. 
B) point B to D. 
C) point B to C. 
D) point A to D. 
E) Not enough information is given.

Question 11

What tool does the U.S.Federal Reserve use to conduct policy? Explain.How does monetary policy impact the macroeconomy?

Accepted Answer

The FED uses the federal funds rate,whic

Question 12

When the Federal Reserve loosens money,the __________ and interest rates __________.

Accepted Answer

A) money supply curve shifts right;rise 
B) money supply curve shifts right;fall 
C) money demand curve shifts right;rise 
D) money demand curve shifts left;rise 
E) money supply and demand curves don't change;rise 
A) money supply curve shifts right;rise 
B) money supply curve shifts right;fall 
C) money demand curve shifts right;rise 
D) money demand curve shifts left;rise 
E) money supply and demand curves don't change;rise

Question 13

Expected inflation is:

Accepted Answer

A) equal to zero. 
B) equal to the real interest rate. 
C) equal to future periods' inflation rate. 
D) the rate of inflation that firms believe will prevail in macroeconomy. 
E) about 2 percent. 
A) equal to zero. 
B) equal to the real interest rate. 
C) equal to future periods' inflation rate. 
D) the rate of inflation that firms believe will prevail in macroeconomy. 
E) about 2 percent.

Question 14

In a weakening economy,you might expect producers to:

Accepted Answer

A) lower wages to increase quantity demand for their output. 
B) lower prices to increase quantity demand for their output. 
C) increase prices to increase quantity demand for their output. 
D) lower prices to reduce quantity demand for their output. 
E) raise wages to hire more productive workers. 
A) lower wages to increase quantity demand for their output. 
B) lower prices to increase quantity demand for their output. 
C) increase prices to increase quantity demand for their output. 
D) lower prices to reduce quantity demand for their output. 
E) raise wages to hire more productive workers.

Question 15

When the Federal Reserve wants to increase the money supply,it:

Accepted Answer

A) conducts open-market purchases. 
B) conducts open-market sales. 
C) increases the reserve rate. 
D) buys euros. 
E) prints money. 
A) conducts open-market purchases. 
B) conducts open-market sales. 
C) increases the reserve rate. 
D) buys euros. 
E) prints money.

Question 16

If nominal interest rates are high,you:

Accepted Answer

A) hold only cash. 
B) hold less savings and more cash. 
C) hold all your money in a different currency. 
D) never have any cash in your checking account. 
E) hold less cash and more savings. 
A) hold only cash. 
B) hold less savings and more cash. 
C) hold all your money in a different currency. 
D) never have any cash in your checking account. 
E) hold less cash and more savings.

Question 17

If the Federal Reserve reduces the money supply,

Accepted Answer

A) households would prefer to hold more wealth in an interest-bearing account than as cash. 
B) households would prefer to hold more wealth in a zero-interest account than as cash. 
C) households would prefer to hold all their wealth in an interest-bearing account. 
D) foreigners would refuse to hold dollars. 
E) the federal government would become insolvent. 
A) households would prefer to hold more wealth in an interest-bearing account than as cash. 
B) households would prefer to hold more wealth in a zero-interest account than as cash. 
C) households would prefer to hold all their wealth in an interest-bearing account. 
D) foreigners would refuse to hold dollars. 
E) the federal government would become insolvent.

Question 18

According to the Fisher equation,the nominal interest rate is equal to:

Accepted Answer

A) the rate of inflation. 
B) the real interest rate minus the rate of inflation. 
C) the real interest rate plus the rate of inflation. 
D) the rate of unemployment. 
E) the real interest rate plus short-run economic fluctuations. 
A) the rate of inflation. 
B) the real interest rate minus the rate of inflation. 
C) the real interest rate plus the rate of inflation. 
D) the rate of unemployment. 
E) the real interest rate plus short-run economic fluctuations.

Question 19

-Consider Figure 12.12 below,which shows the price of oil from January 2007-July 2008.What are the impacts of this on the macroeconomy? In particular which curve does this impact? Explain.

Accepted Answer

Oil prices are a form of cost shock, @#IMG-DLM& ,t

Question 20

Which of the following contributed to high levels of inflation in the 1970s?
i.oil price shocks
ii.lower taxes
iii.a productivity slowdown

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) ii and iii 
A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) ii and iii

The economywide rate of inflation is given by:

The Phillips curve assumes inflation expectations are rational.

The structure of the short-run model is best described as which of the following?

When the Federal Reserve increases the interest rate,the MP curve shifts up and potential output falls.

The MP curve stands for and describes .

According to the Phillips curve,if current output is above potential output,

-Explain how misunderstanding potential real GDP can lead to the wrong monetary policy.

Firms alter their prices based on:

What is the main policy tool available to the Federal Reserve?

-Starting at any equilibrium in Figure 12.11,if the Fed tightens money,the money market would move from:

What tool does the U.S.Federal Reserve use to conduct policy? Explain.How does monetary policy impact the macroeconomy?

When the Federal Reserve loosens money,the and interest rates .

Expected inflation is:

In a weakening economy,you might expect producers to:

When the Federal Reserve wants to increase the money supply,it:

If nominal interest rates are high,you:

If the Federal Reserve reduces the money supply,

According to the Fisher equation,the nominal interest rate is equal to:

-Consider Figure 12.12 below,which shows the price of oil from January 2007-July 2008.What are the impacts of this on the macroeconomy? In particular which curve does this impact? Explain.

Which of the following contributed to high levels of inflation in the 1970s? i.oil price shocks ii.lower taxes iii.a productivity slowdown

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

An Introduction to the Short Run

The Great Recession: a First Look

The Is 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 12: Monetary Policy and the Phillips Curve

The economywide rate of inflation is given by:

The Phillips curve assumes inflation expectations are rational.

The structure of the short-run model is best described as which of the following?

When the Federal Reserve increases the interest rate,the MP curve shifts up and potential output falls.

The MP curve stands for __________ and describes __________.

According to the Phillips curve,if current output is above potential output,

-Explain how misunderstanding potential real GDP can lead to the wrong monetary policy.

Firms alter their prices based on:

What is the main policy tool available to the Federal Reserve?

-Starting at any equilibrium in Figure 12.11,if the Fed tightens money,the money market would move from:

What tool does the U.S.Federal Reserve use to conduct policy? Explain.How does monetary policy impact the macroeconomy?

When the Federal Reserve loosens money,the __________ and interest rates __________.

Expected inflation is:

In a weakening economy,you might expect producers to:

When the Federal Reserve wants to increase the money supply,it:

If nominal interest rates are high,you:

If the Federal Reserve reduces the money supply,

According to the Fisher equation,the nominal interest rate is equal to:

-Consider Figure 12.12 below,which shows the price of oil from January 2007-July 2008.What are the impacts of this on the macroeconomy? In particular which curve does this impact? Explain.

Which of the following contributed to high levels of inflation in the 1970s? i.oil price shocks ii.lower taxes iii.a productivity slowdown

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

An Introduction to the Short Run

The Great Recession: a First Look

The Is 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

The MP curve stands for and describes .

When the Federal Reserve loosens money,the and interest rates .