Question 1

The advantage of an explicit inflation target is that:

Accepted Answer

A) it helps anchor inflation expectations. 
B) it allows banks to set interest rates. 
C) it stabilizes employment. 
D) it raises the marginal product of capital. 
E) it completely eradicates discretionary monetary policy. 
A) it helps anchor inflation expectations. 
B) it allows banks to set interest rates. 
C) it stabilizes employment. 
D) it raises the marginal product of capital. 
E) it completely eradicates discretionary monetary policy.

Question 2

The equation used to predict the federal funds rate is called the:

Accepted Answer

A) Phillips curve. 
B) monetary policy rule. 
C) Taylor rule. 
D) marginal product of capital. 
E) Slutsky equation. 
A) Phillips curve. 
B) monetary policy rule. 
C) Taylor rule. 
D) marginal product of capital. 
E) Slutsky equation.

Question 3

If the monetary policy parameter   
changes,it causes the AD curve to shift.

Accepted Answer

A) True 
 B)False

Question 4

If the United Auto Workers successfully negotiate higher wages,this would cause the AD curve to shift to the left.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following equations,discussed in the text,can be used to predict the federal funds rate?

Accepted Answer

A)    
B)    
C)    
D)    
E) none of the above 
A)    
B)    
C)    
D)    
E) none of the above

Question 6

-Consider Figure 13.2.Each of the aggregate demand curves pictured represents a different economy.In which economy would fighting inflation have the biggest impact on real output?

Accepted Answer

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

Question 7

In the simple monetary policy rule  
,  
Represents:

Accepted Answer

A) the marginal product of capital. 
B) how sensitive monetary policy is to changes in inflation. 
C) the deviation of the inflation rate from the target rate. 
D) the target rate of inflation. 
E) none of the above 
A) the marginal product of capital. 
B) how sensitive monetary policy is to changes in inflation. 
C) the deviation of the inflation rate from the target rate. 
D) the target rate of inflation. 
E) none of the above

Question 8

Policymakers will find it easier to achieve their goals by sticking to policy rules rather than discretion if they face the problem of:

Accepted Answer

A) very short policy lags. 
B) adaptive expectations. 
C) time inconsistency. 
D) discretionary fiscal policy. 
E) a weak central bank. 
A) very short policy lags. 
B) adaptive expectations. 
C) time inconsistency. 
D) discretionary fiscal policy. 
E) a weak central bank.

Question 9

The aggregate supply curve is derived from:

Accepted Answer

A) Okun's law. 
B) the Phillips curve. 
C) the Fisher equation. 
D) the monetary policy rule. 
E) the interaction of the IS and MP curves. 
A) Okun's law. 
B) the Phillips curve. 
C) the Fisher equation. 
D) the monetary policy rule. 
E) the interaction of the IS and MP curves.

Question 10

How does the simple monetary rule dictate interest responses to a decrease in the rate of inflation?

Accepted Answer

The simple monetary

Question 11

Because deflation is so costly,some have argued that setting an inflation target at 2 percent is too low and it should be set higher,to 3 percent,especially in the economic environment of 2007-2010.Consider the impact of such an increase in the inflation target using the AD/AS framework in the short and long run.Begin your analysis in the long-run equilibrium.

Accepted Answer

Consider the AD curve: @#IMG-DLM& if @#IMG-DLM& in the short

Question 12

Which of the following shifts the aggregate supply curve?

Accepted Answer

A) an increase in the price of oil 
B) a change in the previous period's inflation rate 
C) higher taxes on firms 
D) all of the above 
E) an increase in government expenditure 
A) an increase in the price of oil 
B) a change in the previous period's inflation rate 
C) higher taxes on firms 
D) all of the above 
E) an increase in government expenditure

Question 13

-Consider Figure 13.2.The aggregate demand curve __________ displays a relatively aggressive monetary policy,while the curve __________ displays a monetary policy completely unresponsive to changes in inflation.

Accepted Answer

A)    
B)    
C)    
D)    
E) none of the above 
A)    
B)    
C)    
D)    
E) none of the above

Question 14

Between the third and fourth quarter of 2006 the housing bubble burst in the United States.Using the AS/AD framework to discuss the impact of this macroeconomic event,begin and end in the long run.

Accepted Answer

The answer to this is essentially the op

Question 15

Which of the following best describes movement along the AD curve?

Accepted Answer

A) A change in the inflation rate causes the central bank to change interest rates,thereby causing a corresponding proportional change in investment. 
B) A sudden increase in the tax rate. 
C) A change in monetary policy. 
D) A change in the inflation rate causes the federal government to reduce discretionary spending. 
E) A change in unemployment causes the federal government to reduce discretionary spending. 
A) A change in the inflation rate causes the central bank to change interest rates,thereby causing a corresponding proportional change in investment. 
B) A sudden increase in the tax rate. 
C) A change in monetary policy. 
D) A change in the inflation rate causes the federal government to reduce discretionary spending. 
E) A change in unemployment causes the federal government to reduce discretionary spending.

Question 16

If policymakers suffer from time inconsistency,they would be better off adopting and sticking to policy rules.

Accepted Answer

A) True 
 B)False

Question 17

Define the steady state in the AS/AD framework.

Accepted Answer

In the ste

Question 18

The simple monetary policy rule discussed at length in the text is:

Accepted Answer

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

Question 19

The reputations of __________,__________,and __________ have convinced observers that the Fed is committed to low and stable inflation.

Accepted Answer

A) John Taylor,Milton Friedman,Karl Marx 
B) George H.W.Bush,Bill Clinton,George W.Bush 
C) Ronald Reagan,Alan Greenspan,Ben Bernanke 
D) Paul Volcker,Alan Greenspan,Ben Bernanke 
E) David Ricardo,John Stuart Mill,Alfred Marshall 
A) John Taylor,Milton Friedman,Karl Marx 
B) George H.W.Bush,Bill Clinton,George W.Bush 
C) Ronald Reagan,Alan Greenspan,Ben Bernanke 
D) Paul Volcker,Alan Greenspan,Ben Bernanke 
E) David Ricardo,John Stuart Mill,Alfred Marshall

Question 20

Since the 1990s,the country with the lowest rate of inflation has been:

Accepted Answer

A) Russia. 
B) the United States. 
C) the United Kingdom. 
D) Japan. 
E) Italy. 
A) Russia. 
B) the United States. 
C) the United Kingdom. 
D) Japan. 
E) Italy.

The advantage of an explicit inflation target is that:

The equation used to predict the federal funds rate is called the:

If the monetary policy parameter changes,it causes the AD curve to shift.

If the United Auto Workers successfully negotiate higher wages,this would cause the AD curve to shift to the left.

Which of the following equations,discussed in the text,can be used to predict the federal funds rate?

-Consider Figure 13.2.Each of the aggregate demand curves pictured represents a different economy.In which economy would fighting inflation have the biggest impact on real output?

In the simple monetary policy rule , Represents:

Policymakers will find it easier to achieve their goals by sticking to policy rules rather than discretion if they face the problem of:

The aggregate supply curve is derived from:

How does the simple monetary rule dictate interest responses to a decrease in the rate of inflation?

Which of the following shifts the aggregate supply curve?

-Consider Figure 13.2.The aggregate demand curve displays a relatively aggressive monetary policy,while the curve displays a monetary policy completely unresponsive to changes in inflation.

Between the third and fourth quarter of 2006 the housing bubble burst in the United States.Using the AS/AD framework to discuss the impact of this macroeconomic event,begin and end in the long run.

Which of the following best describes movement along the AD curve?

If policymakers suffer from time inconsistency,they would be better off adopting and sticking to policy rules.

Define the steady state in the AS/AD framework.

The simple monetary policy rule discussed at length in the text is:

The reputations of ,,and __ have convinced observers that the Fed is committed to low and stable inflation.

Since the 1990s,the country with the lowest rate of inflation has been:

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 advantage of an explicit inflation target is that:

The equation used to predict the federal funds rate is called the:

If the monetary policy parameter changes,it causes the AD curve to shift.

If the United Auto Workers successfully negotiate higher wages,this would cause the AD curve to shift to the left.

Which of the following equations,discussed in the text,can be used to predict the federal funds rate?

-Consider Figure 13.2.Each of the aggregate demand curves pictured represents a different economy.In which economy would fighting inflation have the biggest impact on real output?

In the simple monetary policy rule , Represents:

Policymakers will find it easier to achieve their goals by sticking to policy rules rather than discretion if they face the problem of:

The aggregate supply curve is derived from:

How does the simple monetary rule dictate interest responses to a decrease in the rate of inflation?

Which of the following shifts the aggregate supply curve?

-Consider Figure 13.2.The aggregate demand curve __________ displays a relatively aggressive monetary policy,while the curve __________ displays a monetary policy completely unresponsive to changes in inflation.

Between the third and fourth quarter of 2006 the housing bubble burst in the United States.Using the AS/AD framework to discuss the impact of this macroeconomic event,begin and end in the long run.

Which of the following best describes movement along the AD curve?

If policymakers suffer from time inconsistency,they would be better off adopting and sticking to policy rules.

Define the steady state in the AS/AD framework.

The simple monetary policy rule discussed at length in the text is:

The reputations of __________,__________,and __________ have convinced observers that the Fed is committed to low and stable inflation.

Since the 1990s,the country with the lowest rate of inflation has been:

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

-Consider Figure 13.2.The aggregate demand curve displays a relatively aggressive monetary policy,while the curve displays a monetary policy completely unresponsive to changes in inflation.

The reputations of ,,and __ have convinced observers that the Fed is committed to low and stable inflation.