Exam 14: Macroeconomic Policy: Challenges in a Global Economy

Using real GDP and employment growth relative to the peak of the business cycle,the 2007-2009 recession,as compared to the previous two recessions in 1990 and 2001:

If workers fail to anticipate inflation increases,their real wages are likely to fall.

The 2007-2009 recession can be shown as a combination of a(n)_____ in aggregate demand and _______ in the short-run aggregate supply.

The long-run Phillips curve:

Robert Lucas argued that the theory of rational expectations suggests that tax cuts will work if used temporarily.

Ceteris paribus,if workers receive all their productivity increases in the form of higher wages,then wage inflation will remain stable.

Explain why reducing the deficit and reducing unemployment are incompatible fiscal policy goals.

The willingness of people around the world to use and hold dollars allows the U.S.government to increase the money supply without the immediate risk of inflation.

Which of the following helps explain jobless recoveries?

The American Recovery and Reinvestment Act,signed into law in February 2009,was designed to shift aggregate:

Leverage occurs when investors borrow money at low interest rates to purchase investments that may provide higher rates of return.

________ measure the rate of inflation expected by workers for any given period.

According to the equation for the Phillips curve,if nominal wages increase by 3% and productivity increases 2%,then inflation will change by:

The adjustable-rate mortgage was the standard type before the early 2000s.

Increased outsourcing by U.S.companies has contributed to the jobless recovery after the 2007-2009 recession.

When the expected rate of inflation increases,the Phillips curve:

According to the equation for the Phillips curve,if wages increase by 3% and productivity increases by 5%,then inflation will be:

The long-run Phillips curve is the counterpart to the:

Stagflation occurs when rising unemployment is accompanied by rising inflation.

How did low interest rates affect the housing market in the early 2000s? How did low interest rates contribute to problems in the housing market?