Question 1

In a global economy,a problem with using fiscal and monetary policies to fix the problems in our country is that they:

Accepted Answer

A)  are more likely to help other countries than to help us. 
B)  become completely ineffective. 
C)  make our trade balance deteriorate. 
D)  can lead to retaliatory actions by other nations. 
A)  are more likely to help other countries than to help us. 
B)  become completely ineffective. 
C)  make our trade balance deteriorate. 
D)  can lead to retaliatory actions by other nations.

Question 2

Which of the following statements is NOT an effective criticism of rational expectations?

Accepted Answer

A)  Studies have shown that macroeconomic policies do have an impact on the economy. 
B)  Labor markets are beset with imperfect information. 
C)  Labor markets exhibit short-term wage stickiness. 
D)  Errors about future expectations are randomly distributed. 
A)  Studies have shown that macroeconomic policies do have an impact on the economy. 
B)  Labor markets are beset with imperfect information. 
C)  Labor markets exhibit short-term wage stickiness. 
D)  Errors about future expectations are randomly distributed.

Question 3

In a jobless recovery neither output nor employment growth occurs.

Accepted Answer

A) True 
 B)False

Question 4

Expansionary monetary policy leads to inflation and is therefore not an appropriate policy for addressing a jobless recovery.

Accepted Answer

A) True 
 B)False

Question 5

One implication of the long-run Phillips curve is that:

Accepted Answer

A)  economic policies to keep the unemployment rate below its natural rate will lead to accelerating inflation. 
B)  in the long run,the government can accurately estimate the natural rate of unemployment. 
C)  in the long run,the curve becomes upward sloping. 
D)  the natural rate of unemployment must be lowered to zero. 
A)  economic policies to keep the unemployment rate below its natural rate will lead to accelerating inflation. 
B)  in the long run,the government can accurately estimate the natural rate of unemployment. 
C)  in the long run,the curve becomes upward sloping. 
D)  the natural rate of unemployment must be lowered to zero.

Question 6

Essentially,the way to reduce inflationary expectations using demand-side policies is to cause an economic slowdown.

Accepted Answer

A) True 
 B)False

Question 7

It is hard to see the long-term debt obligations stemming from health care and Social Security because:

Accepted Answer

A)  we do not know how many people will qualify for these payments. 
B)  these expenses were budgeted and paid out during the year in which the recipients contributed their taxes. 
C)  these expenses are budgeted and paid out during the year in which the costs are incurred. 
D)  these expenses never show up in the budget. 
A)  we do not know how many people will qualify for these payments. 
B)  these expenses were budgeted and paid out during the year in which the recipients contributed their taxes. 
C)  these expenses are budgeted and paid out during the year in which the costs are incurred. 
D)  these expenses never show up in the budget.

Question 8

In the aftermath of a recession,firms are more likely to add overtime shifts than hire permanent workers when the demand for their product increases.

Accepted Answer

A) True 
 B)False

Question 9

Increases in productivity contributed to the jobless recovery after the 2007-2009 recession.

Accepted Answer

A) True 
 B)False

Question 10

According to the equation for the Phillips curve,if nominal wages and labor productivity both increase by 3%,then the inflation rate _____ and unemployment _____.

Accepted Answer

A)  increases by 3%;falls 
B)  increases by 3%;rises 
C)  is zero;is at its natural rate 
D)  increases by 3%;is at its natural rate 
A)  increases by 3%;falls 
B)  increases by 3%;rises 
C)  is zero;is at its natural rate 
D)  increases by 3%;is at its natural rate

Question 11

What problems will we face if world demand for U.S.Treasuries falls?

Accepted Answer

If world demand for U.S.Treasuries falls

Question 12

The cost of financing U.S.government debt would be lower if foreigners decided to hold fewer U.S.dollars.

Accepted Answer

A) True 
 B)False

Question 13

Social Security payments rise according to the rate of inflation.

Accepted Answer

A) True 
 B)False

Question 14

As inflationary expectations rise,the _____ Phillips curve shifts to the _____.

Accepted Answer

A)  long-run;right 
B)  short-run;right 
C)  long-run;left 
D)  short-run;left 
A)  long-run;right 
B)  short-run;right 
C)  long-run;left 
D)  short-run;left

Question 15

The original Phillips curve shows the relationship between the rate of change in wages and the unemployment rate.Why is the change in wages strongly correlated with inflation? What assumption does the Phillips curve relationship make about productivity?

Accepted Answer

Wages are one of the largest costs many

Question 16

The 2007-2009 recession was caused by:

Accepted Answer

A)  an increase in demand following a rapid increase in the money supply. 
B)  a drop in aggregate supply caused by a slowdown in productivity growth. 
C)  a decrease in supply caused by an increase in oil prices. 
D)  a decrease in aggregate demand triggered by a financial crisis. 
A)  an increase in demand following a rapid increase in the money supply. 
B)  a drop in aggregate supply caused by a slowdown in productivity growth. 
C)  a decrease in supply caused by an increase in oil prices. 
D)  a decrease in aggregate demand triggered by a financial crisis.

Question 17

In effect,the Phillips curve framework implies that to fight inflationary expectations,policymakers must:

Accepted Answer

A)  rapidly increase aggregate demand. 
B)  cause unemployment. 
C)  decrease aggregate supply. 
D)  increase exports. 
A)  rapidly increase aggregate demand. 
B)  cause unemployment. 
C)  decrease aggregate supply. 
D)  increase exports.

Question 18

(Figure: Determining Curves)   The curve on the graph is a:

Accepted Answer

A)  demand curve. 
B)  Phillips curve. 
C)  labor demand curve. 
D)  production possibilities curve. 
A)  demand curve. 
B)  Phillips curve. 
C)  labor demand curve. 
D)  production possibilities curve.

Question 19

Collateralized debt obligations:

Accepted Answer

A)  are mortgages whose interest rates can change. 
B)  are financial instruments backed by a collection of mortgages. 
C)  are financial instruments that provide insurance against a default. 
D)  are home loans made to borrowers with poor credit. 
A)  are mortgages whose interest rates can change. 
B)  are financial instruments backed by a collection of mortgages. 
C)  are financial instruments that provide insurance against a default. 
D)  are home loans made to borrowers with poor credit.

Question 20

What caused the housing boom of 2003 to 2007?

Accepted Answer

The early 2000 housing bubble was caused

In a global economy,a problem with using fiscal and monetary policies to fix the problems in our country is that they:

Which of the following statements is NOT an effective criticism of rational expectations?

In a jobless recovery neither output nor employment growth occurs.

Expansionary monetary policy leads to inflation and is therefore not an appropriate policy for addressing a jobless recovery.

One implication of the long-run Phillips curve is that:

Essentially,the way to reduce inflationary expectations using demand-side policies is to cause an economic slowdown.

It is hard to see the long-term debt obligations stemming from health care and Social Security because:

In the aftermath of a recession,firms are more likely to add overtime shifts than hire permanent workers when the demand for their product increases.

Increases in productivity contributed to the jobless recovery after the 2007-2009 recession.

According to the equation for the Phillips curve,if nominal wages and labor productivity both increase by 3%,then the inflation rate _ and unemployment _.

What problems will we face if world demand for U.S.Treasuries falls?

The cost of financing U.S.government debt would be lower if foreigners decided to hold fewer U.S.dollars.

Social Security payments rise according to the rate of inflation.

As inflationary expectations rise,the _ Phillips curve shifts to the _.

The original Phillips curve shows the relationship between the rate of change in wages and the unemployment rate.Why is the change in wages strongly correlated with inflation? What assumption does the Phillips curve relationship make about productivity?

The 2007-2009 recession was caused by:

In effect,the Phillips curve framework implies that to fight inflationary expectations,policymakers must:

(Figure: Determining Curves) The curve on the graph is a:

Collateralized debt obligations:

What caused the housing boom of 2003 to 2007?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

International Trade

Open Economy Macroeconomic

Filters

Exam 14: Macroeconomic Policy: Challenges in a Global Economy

In a global economy,a problem with using fiscal and monetary policies to fix the problems in our country is that they:

Which of the following statements is NOT an effective criticism of rational expectations?

In a jobless recovery neither output nor employment growth occurs.

Expansionary monetary policy leads to inflation and is therefore not an appropriate policy for addressing a jobless recovery.

One implication of the long-run Phillips curve is that:

Essentially,the way to reduce inflationary expectations using demand-side policies is to cause an economic slowdown.

It is hard to see the long-term debt obligations stemming from health care and Social Security because:

In the aftermath of a recession,firms are more likely to add overtime shifts than hire permanent workers when the demand for their product increases.

Increases in productivity contributed to the jobless recovery after the 2007-2009 recession.

According to the equation for the Phillips curve,if nominal wages and labor productivity both increase by 3%,then the inflation rate _____ and unemployment _____.

What problems will we face if world demand for U.S.Treasuries falls?

The cost of financing U.S.government debt would be lower if foreigners decided to hold fewer U.S.dollars.

Social Security payments rise according to the rate of inflation.

As inflationary expectations rise,the _____ Phillips curve shifts to the _____.

The original Phillips curve shows the relationship between the rate of change in wages and the unemployment rate.Why is the change in wages strongly correlated with inflation? What assumption does the Phillips curve relationship make about productivity?

The 2007-2009 recession was caused by:

In effect,the Phillips curve framework implies that to fight inflationary expectations,policymakers must:

(Figure: Determining Curves) The curve on the graph is a:

Collateralized debt obligations:

What caused the housing boom of 2003 to 2007?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

International Trade

Open Economy Macroeconomic

Filters

According to the equation for the Phillips curve,if nominal wages and labor productivity both increase by 3%,then the inflation rate _ and unemployment _.

As inflationary expectations rise,the _ Phillips curve shifts to the _.