Exam 14: Macroeconomic Policy: Challenges in a Global Economy

Johnny claims that inflation next year will be 5%,because the inflation rate in the past two years has been 5%.Which theorist would be vindicated by this behavior?

Monetized debt is paid for by:

________ occurs when both inflation and unemployment increase over time.

Explain how changing employment practices drive jobless recoveries.

If policymakers were using the Phillips curve and they wished to decrease inflation to near zero,they would:

One of the reasons wages may be sticky is:

Explain how recent increases in productivity drive jobless recoveries.

The original Phillips curve showed a ________ relationship between ________ and unemployment rates.

Use the following to answer questions Figure: Determining Long Run and Short Run Economic Shifts -(Figure: Determining Long Run and Short Run Economic Shifts)Starting at point j,the economy will move to ____ in the long run if policymakers reduce aggregate demand.

What are the policy implications of the rational expectations model? Use an example and a graph to support your response.

Use the following to answer questions Figure: Understanding Phillips Curves Shifts 2 -(Figure: Understanding Phillips Curves Shifts 2)Which of the following best describes a decision by Congress to move the economy from Phillips curve PC₀ to Phillips curve PC₁?

Robert Lucas argued that:

Real wages show how much goods and services our wages can buy.

The United States underwent _______ throughout most of 2009.

The 2007-2009 recession was brought on when the Fed used excessive tightening of the money supply to solve the stagflation of 2004 to 2007.

The 2007-2009 recession can be shown as a combination of a decline in aggregate demand and an increase in the short-run aggregate supply.

Which of the following is an appropriate policy to address a jobless recovery?

When the cost of health care increases,Medicare payments:

For developed countries like the United States and Japan,the increased pace of globalization has brought increased competition for resources.

Predictions based on rational expectations are always correct.