Question 1

The fact that any model that utilizes adaptive expectations necessarily will be misspecified is called:

Accepted Answer

A) Okun's law. 
B) time inconsistency. 
C) the Lucas critique. 
D) the Slutsky paradox. 
E) monetarism. 
A) Okun's law. 
B) time inconsistency. 
C) the Lucas critique. 
D) the Slutsky paradox. 
E) monetarism. C

Question 2

If   
,   
,and   
,what would the simple monetary rule dictate the real interest be if   
? If   
,   
? In each case,is the economy in an expansion,recession,or in the long run?

Accepted Answer

The simple monetary rule is:   so
•   ,because   ,expansion;
•   ,because   ,long run;
•   ,because   ,recession.

Question 3

-Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario.The United Auto Workers were able to negotiate a contract for higher wages and better benefits.The economy initially moves from point __________ to point __________;eventually the economy returns to the steady state at point __________.

Accepted Answer

A) c;d;a 
B) a;d;a 
C) c;a;b 
D) b;a;c 
E) Not enough information is given. 
A) c;d;a 
B) a;d;a 
C) c;a;b 
D) b;a;c 
E) Not enough information is given. B

Question 4

If  
Equals zero,

Accepted Answer

A) the AD curve is horizontal. 
B) the AD curve is relatively steep. 
C) the AD curve is relatively flat. 
D) the AD curve is vertical. 
E) Not enough information is given. 
A) the AD curve is horizontal. 
B) the AD curve is relatively steep. 
C) the AD curve is relatively flat. 
D) the AD curve is vertical. 
E) Not enough information is given.

Question 5

-Consider Figure 13.2.Each of the aggregate demand curves pictured represents a different economy.Which of the four economies' central banks would be most concerned with unemployment rather than inflation?

Accepted Answer

A) Economy 2 
B) Economy 4 
C) Economy 3 
D) Economy 1 
E) Not enough information is given. 
A) Economy 2 
B) Economy 4 
C) Economy 3 
D) Economy 1 
E) Not enough information is given.

Question 6

A policy rule that dictates monetary policy is:

Accepted Answer

A) written down. 
B) at the discretion of the president. 
C) at the discretion of the chairman of the Federal Reserve. 
D) independent of the state of the economy. 
E) a function of the state of the economy. 
A) written down. 
B) at the discretion of the president. 
C) at the discretion of the chairman of the Federal Reserve. 
D) independent of the state of the economy. 
E) a function of the state of the economy.

Question 7

A sudden increase in the price of oil would cause the AS curve to shift up and to the left.

Accepted Answer

A) True 
 B)False

Question 8

Professor John Taylor suggested using which set of values for the Taylor rule?

Accepted Answer

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

Question 9

If m = 1/2 in the simple monetary rule and if inflation rises by 2 percent,interest rates should rise by 2 percent.

Accepted Answer

A) True 
 B)False

Question 10

What is the Taylor rule? How effective a tool is it?

Accepted Answer

The Taylor rule is a policy rule which d

Question 11

The equation used to predict movements in the federal funds rate is called the Slutsky equation.

Accepted Answer

A) True 
 B)False

Question 12

A policy rule dictates that monetary policy is at the discretion of the president.

Accepted Answer

A) True 
 B)False

Question 13

The aggregate demand curve is given by:

Accepted Answer

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

Question 14

Policy is conducted by discretion if policymakers:

Accepted Answer

A) size up the economy and choose whatever policy seems appropriate at the time. 
B) announce in advance how policy will respond to various situations and commit themselves to following through on this announcement. 
C) maintain a constant growth rate of the money supply without making their decision public. 
D) announce and achieve a balanced government budget. 
E) announce and maintain a constant interest rate. 
A) size up the economy and choose whatever policy seems appropriate at the time. 
B) announce in advance how policy will respond to various situations and commit themselves to following through on this announcement. 
C) maintain a constant growth rate of the money supply without making their decision public. 
D) announce and achieve a balanced government budget. 
E) announce and maintain a constant interest rate.

Question 15

If  
Is relatively high,

Accepted Answer

A) monetary policy is relatively permissive and the AD curve is relatively flat. 
B) monetary policy is relatively aggressive and the AD curve is relatively steep. 
C) monetary policy is relatively aggressive and the AD curve is relatively flat. 
D) monetary policy is relatively permissive and the AD curve is relatively steep. 
E) monetary policy is relatively permissive and the AD curve is vertical. 
A) monetary policy is relatively permissive and the AD curve is relatively flat. 
B) monetary policy is relatively aggressive and the AD curve is relatively steep. 
C) monetary policy is relatively aggressive and the AD curve is relatively flat. 
D) monetary policy is relatively permissive and the AD curve is relatively steep. 
E) monetary policy is relatively permissive and the AD curve is vertical.

Question 16

Under rational expectations,

Accepted Answer

A) people use all the information at their disposal to make their best forecast of the coming rate of inflation. 
B) people use all past rates of inflation to make their best forecast of the coming rate of inflation. 
C) people use announcements by the Fed to make their best forecast of the coming rate of inflation. 
D) people use only the Fed's inflation target to make their best forecast of the coming rate of inflation. 
E) people use the unemployment rate to make their best forecast of the coming rate of inflation. 
A) people use all the information at their disposal to make their best forecast of the coming rate of inflation. 
B) people use all past rates of inflation to make their best forecast of the coming rate of inflation. 
C) people use announcements by the Fed to make their best forecast of the coming rate of inflation. 
D) people use only the Fed's inflation target to make their best forecast of the coming rate of inflation. 
E) people use the unemployment rate to make their best forecast of the coming rate of inflation.

Question 17

Consider the monetary rule  
)If the inflation rate is 4 percent,the marginal product of capital is 2 percent,and the target rate of inflation is 3 percent,then the real interest rate should be:

Accepted Answer

A) 3.50 percent. 
B) 3.25 percent. 
C) 2.25 percent. 
D) 1.75 percent. 
E) 2.50 percent. 
A) 3.50 percent. 
B) 3.25 percent. 
C) 2.25 percent. 
D) 1.75 percent. 
E) 2.50 percent.

Question 18

A monetary policy rule may contain which of the following?

Accepted Answer

A) price shocks 
B) short-term output 
C) the unemployment rate 
D) the inflation rate 
E) all of the above 
A) price shocks 
B) short-term output 
C) the unemployment rate 
D) the inflation rate 
E) all of the above

Question 19

-Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario.Nigerian rebels taking over privately owned oil wells would cause the economy to initially move from point__________ to point __________.

Accepted Answer

A) c;b 
B) b;c 
C) c;a 
D) b;a 
E) Not enough information is given. 
A) c;b 
B) b;c 
C) c;a 
D) b;a 
E) Not enough information is given.

Question 20

Combining the IS and monetary policy rule curves gives us:

Accepted Answer

A) Okun's law. 
B) the Phillips curve. 
C) the aggregate demand curve. 
D) the MP curve. 
E) current output. 
A) Okun's law. 
B) the Phillips curve. 
C) the aggregate demand curve. 
D) the MP curve. 
E) current output.

The fact that any model that utilizes adaptive expectations necessarily will be misspecified is called:

If , ,and ,what would the simple monetary rule dictate the real interest be if ? If , ? In each case,is the economy in an expansion,recession,or in the long run?

If Equals zero,

-Consider Figure 13.2.Each of the aggregate demand curves pictured represents a different economy.Which of the four economies' central banks would be most concerned with unemployment rather than inflation?

A policy rule that dictates monetary policy is:

A sudden increase in the price of oil would cause the AS curve to shift up and to the left.

Professor John Taylor suggested using which set of values for the Taylor rule?

If m = 1/2 in the simple monetary rule and if inflation rises by 2 percent,interest rates should rise by 2 percent.

What is the Taylor rule? How effective a tool is it?

The equation used to predict movements in the federal funds rate is called the Slutsky equation.

A policy rule dictates that monetary policy is at the discretion of the president.

The aggregate demand curve is given by:

Policy is conducted by discretion if policymakers:

If Is relatively high,

Under rational expectations,

Consider the monetary rule )If the inflation rate is 4 percent,the marginal product of capital is 2 percent,and the target rate of inflation is 3 percent,then the real interest rate should be:

A monetary policy rule may contain which of the following?

-Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario.Nigerian rebels taking over privately owned oil wells would cause the economy to initially move from point to point .

Combining the IS and monetary policy rule curves gives us:

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

Monetary Policy and the Phillips Curve

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 13: Stabilization Policy and the Asad Framework

The fact that any model that utilizes adaptive expectations necessarily will be misspecified is called:

If , ,and ,what would the simple monetary rule dictate the real interest be if ? If , ? In each case,is the economy in an expansion,recession,or in the long run?

If Equals zero,

-Consider Figure 13.2.Each of the aggregate demand curves pictured represents a different economy.Which of the four economies' central banks would be most concerned with unemployment rather than inflation?

A policy rule that dictates monetary policy is:

A sudden increase in the price of oil would cause the AS curve to shift up and to the left.

Professor John Taylor suggested using which set of values for the Taylor rule?

If m = 1/2 in the simple monetary rule and if inflation rises by 2 percent,interest rates should rise by 2 percent.

What is the Taylor rule? How effective a tool is it?

The equation used to predict movements in the federal funds rate is called the Slutsky equation.

A policy rule dictates that monetary policy is at the discretion of the president.

The aggregate demand curve is given by:

Policy is conducted by discretion if policymakers:

If Is relatively high,

Under rational expectations,

Consider the monetary rule )If the inflation rate is 4 percent,the marginal product of capital is 2 percent,and the target rate of inflation is 3 percent,then the real interest rate should be:

A monetary policy rule may contain which of the following?

-Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario.Nigerian rebels taking over privately owned oil wells would cause the economy to initially move from point__________ to point __________.

Combining the IS and monetary policy rule curves gives us:

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

Monetary Policy and the Phillips Curve

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

-Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario.Nigerian rebels taking over privately owned oil wells would cause the economy to initially move from point to point .