Question 1

The ultimate goal of macroeconomic policy is:

Accepted Answer

A) low and stable inflation. 
B) full employment,output at potential,and low,stable inflation. 
C) full employment,output above potential,and low,stable inflation. 
D) zero unemployment and inflation. 
E) low interest rates. 
A) low and stable inflation. 
B) full employment,output at potential,and low,stable inflation. 
C) full employment,output above potential,and low,stable inflation. 
D) zero unemployment and inflation. 
E) low interest rates.

Question 2

-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 __________;eventually the economy would return to the steady state at point __________.

Accepted Answer

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

Question 3

When we raise the federal funds rate by 2 percent for every 1 percent increase in the inflation rate,this is an example of:

Accepted Answer

A) a fiscal policy rule. 
B) a monetary policy rule. 
C) discretionary monetary policy. 
D) discretionary fiscal policy. 
E) none of the above 
A) a fiscal policy rule. 
B) a monetary policy rule. 
C) discretionary monetary policy. 
D) discretionary fiscal policy. 
E) none of the above

Question 4

-Consider Figure 13.5.If the Fed sets a higher inflation target,under rational expectations,the economy moves from point __________ to point __________.

Accepted Answer

A) a;c slowly 
B) a;c instantly 
C) a;d instantly 
D) b;d slowly 
E) b;c instantly 
A) a;c slowly 
B) a;c instantly 
C) a;d instantly 
D) b;d slowly 
E) b;c instantly

Question 5

Canada has an explicit inflation target.

Accepted Answer

A) True 
 B)False

Question 6

In the simple monetary policy rule,a large   
means that the central bank is aggressively fighting inflation.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is the aggregate supply curve?

Accepted Answer

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

Question 8

The adjustment process back to the steady state in the short-run model hinges on the:

Accepted Answer

A) rate of unemployment. 
B) immediate reaction to a change in the inflation rate. 
C) consumer's response to inflation shocks. 
D) government's response to inflation shocks. 
E) slow adjustment of inflation reflected in the aggregate supply curve. 
A) rate of unemployment. 
B) immediate reaction to a change in the inflation rate. 
C) consumer's response to inflation shocks. 
D) government's response to inflation shocks. 
E) slow adjustment of inflation reflected in the aggregate supply curve.

Question 9

The monetary policy rule "dictates":

Accepted Answer

A) the optimal rate of inflation. 
B) the choice of federal funds rate. 
C) the marginal product of capital. 
D) the natural rate of unemployment. 
E) none of the above 
A) the optimal rate of inflation. 
B) the choice of federal funds rate. 
C) the marginal product of capital. 
D) the natural rate of unemployment. 
E) none of the above

Question 10

A change in which of the following parameters would cause a movement along the AD curve  
?

Accepted Answer

A)    
B)    
C)    
D)    
E) a and b 
A)    
B)    
C)    
D)    
E) a and b

Question 11

If  
Is close to zero,

Accepted Answer

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

Question 12

Combining the IS and monetary policy curves gives us the aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 13

When the central bank pursues expansionary monetary policy and all other economic agents build this into their decision making,__________ with no economic benefit;this is called the __________ problem.

Accepted Answer

A) output rises;policy lag 
B) unemployment rises;time inconsistency 
C) expectations rise;adaptive expectations 
D) inflation rises;time inconsistency 
E) inflation rises;discretionary 
A) output rises;policy lag 
B) unemployment rises;time inconsistency 
C) expectations rise;adaptive expectations 
D) inflation rises;time inconsistency 
E) inflation rises;discretionary

Question 14

If  
Is close to zero,

Accepted Answer

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

Question 15

Since the 1990s,the country with the lowest rate of inflation has been the United States.

Accepted Answer

A) True 
 B)False

Question 16

If the simple Taylor rule models the "ideal" federal funds rate,the __________ displayed a monetary policy that was too loose.

Accepted Answer

A) 1960s 
B) 1970s 
C) 1980s 
D) 1990s 
E) 2000s 
A) 1960s 
B) 1970s 
C) 1980s 
D) 1990s 
E) 2000s

Question 17

If British incomes rose,this would be reflected in the short-run model as a shift in the U.S.AS to the right.

Accepted Answer

A) True 
 B)False

Question 18

The Lucas critique states that it is better for economists to use adaptive rather than rational expectations in their macroeconomic models.

Accepted Answer

A) True 
 B)False

Question 19

The simple monetary rule states that,if the current rate of inflation is below the inflation target,interest rates should fall.

Accepted Answer

A) True 
 B)False

Question 20

If  
In the simple monetary rule and the inflation rate is 2 percent below the target inflation rate,the Federal Reserve will:

Accepted Answer

A) lower the target rate by 2 percent. 
B) raise the interest rate by 1 percent. 
C) lower the interest rate by 1 percent. 
D) lower the marginal product of capital by 1 percent. 
E) Not enough information is given. 
A) lower the target rate by 2 percent. 
B) raise the interest rate by 1 percent. 
C) lower the interest rate by 1 percent. 
D) lower the marginal product of capital by 1 percent. 
E) Not enough information is given.

The ultimate goal of macroeconomic policy is:

-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 ;eventually the economy would return to the steady state at point __.

When we raise the federal funds rate by 2 percent for every 1 percent increase in the inflation rate,this is an example of:

-Consider Figure 13.5.If the Fed sets a higher inflation target,under rational expectations,the economy moves from point to point .

Canada has an explicit inflation target.

In the simple monetary policy rule,a large means that the central bank is aggressively fighting inflation.

Which of the following is the aggregate supply curve?

The adjustment process back to the steady state in the short-run model hinges on the:

The monetary policy rule "dictates":

A change in which of the following parameters would cause a movement along the AD curve ?

If Is close to zero,

Combining the IS and monetary policy curves gives us the aggregate supply curve.

When the central bank pursues expansionary monetary policy and all other economic agents build this into their decision making, with no economic benefit;this is called the problem.

If Is close to zero,

Since the 1990s,the country with the lowest rate of inflation has been the United States.

If the simple Taylor rule models the "ideal" federal funds rate,the __________ displayed a monetary policy that was too loose.

If British incomes rose,this would be reflected in the short-run model as a shift in the U.S.AS to the right.

The Lucas critique states that it is better for economists to use adaptive rather than rational expectations in their macroeconomic models.

The simple monetary rule states that,if the current rate of inflation is below the inflation target,interest rates should fall.

If In the simple monetary rule and the inflation rate is 2 percent below the target inflation rate,the Federal Reserve will:

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 ultimate goal of macroeconomic policy is:

When we raise the federal funds rate by 2 percent for every 1 percent increase in the inflation rate,this is an example of:

-Consider Figure 13.5.If the Fed sets a higher inflation target,under rational expectations,the economy moves from point __________ to point __________.

Canada has an explicit inflation target.

In the simple monetary policy rule,a large means that the central bank is aggressively fighting inflation.

Which of the following is the aggregate supply curve?

The adjustment process back to the steady state in the short-run model hinges on the:

The monetary policy rule "dictates":

A change in which of the following parameters would cause a movement along the AD curve ?

If Is close to zero,

Combining the IS and monetary policy curves gives us the aggregate supply curve.

When the central bank pursues expansionary monetary policy and all other economic agents build this into their decision making,__________ with no economic benefit;this is called the __________ problem.

If Is close to zero,

Since the 1990s,the country with the lowest rate of inflation has been the United States.

If the simple Taylor rule models the "ideal" federal funds rate,the __________ displayed a monetary policy that was too loose.

If British incomes rose,this would be reflected in the short-run model as a shift in the U.S.AS to the right.

The Lucas critique states that it is better for economists to use adaptive rather than rational expectations in their macroeconomic models.

The simple monetary rule states that,if the current rate of inflation is below the inflation target,interest rates should fall.

If In the simple monetary rule and the inflation rate is 2 percent below the target inflation rate,the Federal Reserve will:

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 13.5.If the Fed sets a higher inflation target,under rational expectations,the economy moves from point to point .

When the central bank pursues expansionary monetary policy and all other economic agents build this into their decision making, with no economic benefit;this is called the problem.