Question 1

Describe stagflation,and give an example of when and why stagflation occurred in the United States.

Accepted Answer

Stagflation is the simultaneous occurren

Question 2

According to the equation for the Phillips curve,if nominal wages and labor productivity both rise by 3%:

Accepted Answer

A)  unemployment rises by 3%. 
B)  unemployment falls by 3%. 
C)  unemployment is at its natural rate. 
D)  inflation is accelerating. 
A)  unemployment rises by 3%. 
B)  unemployment falls by 3%. 
C)  unemployment is at its natural rate. 
D)  inflation is accelerating.

Question 3

Expectations theories developed by Keynes,Friedman,and Lucas use the same basic concept to describe the formation of expectations.

Accepted Answer

A) True 
 B)False

Question 4

Milton Friedman once said,"Inflation is the one form of taxation that can be imposed without legislation." What did he mean by this? That is,how does inflation act like a tax,and why is it significant that it can be imposed without legislation?

Accepted Answer

He meant that inflation acts much like a

Question 5

The Fed risks aborting the recovery if it halts its quantitative easing program too soon.

Accepted Answer

A) True 
 B)False

Question 6

Monetizing the debt intensifies the burden of existing debt.

Accepted Answer

A) True 
 B)False

Question 7

The natural rate of unemployment occurs when the rate of increase in the wage is greater than the increase in productivity.

Accepted Answer

A) True 
 B)False

Question 8

If policymakers use expansionary measures to reduce unemployment below its natural rate,the economy will endure decelerating inflation.

Accepted Answer

A) True 
 B)False

Question 9

During the period 2008-2009,_______ million people lost their jobs.

Accepted Answer

A)  3 
B)  4 
C)  7 
D)  12 
A)  3 
B)  4 
C)  7 
D)  12

Question 10

An important implication of the long-run Phillips curve is that monetary and demand-side fiscal policies work well in reducing the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following was a change in banks' lending practices that contributed to a housing bubble?

Accepted Answer

A)  Lenders began to require borrowers to provide proof of income. 
B)  Banks began to originate subprime loans they did not intend to keep. 
C)  Banks developed fixed-rate mortgage loans. 
D)  Banks began to rigorously check borrowers' credit quality. 
A)  Lenders began to require borrowers to provide proof of income. 
B)  Banks began to originate subprime loans they did not intend to keep. 
C)  Banks developed fixed-rate mortgage loans. 
D)  Banks began to rigorously check borrowers' credit quality.

Question 12

A credit default swap:

Accepted Answer

A)  is essentially the same as an adjustable-rate mortgage. 
B)  is essentially the same as insurance against a default. 
C)  prevents investors from defaulting on a swap. 
D)  allows investors to trade one bad stock for another. 
A)  is essentially the same as an adjustable-rate mortgage. 
B)  is essentially the same as insurance against a default. 
C)  prevents investors from defaulting on a swap. 
D)  allows investors to trade one bad stock for another.

Question 13

Banks had an incentive to originate subprime mortgages because they could collect origination fees and then sell the mortgage.

Accepted Answer

A) True 
 B)False

Question 14

Explain what Phillips curves are and what relationship they postulate between inflation and unemployment.Draw a graph to support your response.

Accepted Answer

Phillips curves are drawn to show an inv

Question 15

One cannot understand the debt obligations stemming from health care and Social Security by looking at current deficit statistics.

Accepted Answer

A) True 
 B)False

Question 16

Who will NOT be hurt if the U.S.monetizes its debt?

Accepted Answer

A)  people on fixed incomes 
B)  people who make fixed mortgage payments 
C)  lenders who receive fixed payments 
D)  people who own checking accounts 
A)  people on fixed incomes 
B)  people who make fixed mortgage payments 
C)  lenders who receive fixed payments 
D)  people who own checking accounts

Question 17

Country X is practicing expansionary monetary policy.This drives down the price of its imports and drives up the price of its exports.

Accepted Answer

A) True 
 B)False

Question 18

Suppose the Federal Reserve announces that its policy will increase the supply of money next year.This announcement can be expected to:

Accepted Answer

A)  increase unemployment. 
B)  shift the Phillips curve to the right. 
C)  reduce tax revenue. 
D)  shift the Phillips curve to the left. 
A)  increase unemployment. 
B)  shift the Phillips curve to the right. 
C)  reduce tax revenue. 
D)  shift the Phillips curve to the left.

Question 19

The decrease in short-run aggregate supply during the Great Recession was caused by:

Accepted Answer

A)  excessive consumer debt. 
B)  miscalculation of the risk of subprime mortgages. 
C)  the worldwide glut of savings. 
D)  businesses reducing their production capacity by closing plants and laying off workers. 
A)  excessive consumer debt. 
B)  miscalculation of the risk of subprime mortgages. 
C)  the worldwide glut of savings. 
D)  businesses reducing their production capacity by closing plants and laying off workers.

Question 20

The natural rate of unemployment is the rate at which inflation equals expected inflation,resulting in zero price pressures in the economy.

Accepted Answer

A) True 
 B)False

Describe stagflation,and give an example of when and why stagflation occurred in the United States.

According to the equation for the Phillips curve,if nominal wages and labor productivity both rise by 3%:

Expectations theories developed by Keynes,Friedman,and Lucas use the same basic concept to describe the formation of expectations.

Milton Friedman once said,"Inflation is the one form of taxation that can be imposed without legislation." What did he mean by this? That is,how does inflation act like a tax,and why is it significant that it can be imposed without legislation?

The Fed risks aborting the recovery if it halts its quantitative easing program too soon.

Monetizing the debt intensifies the burden of existing debt.

The natural rate of unemployment occurs when the rate of increase in the wage is greater than the increase in productivity.

If policymakers use expansionary measures to reduce unemployment below its natural rate,the economy will endure decelerating inflation.

During the period 2008-2009,_______ million people lost their jobs.

An important implication of the long-run Phillips curve is that monetary and demand-side fiscal policies work well in reducing the natural rate of unemployment.

Which of the following was a change in banks' lending practices that contributed to a housing bubble?

A credit default swap:

Banks had an incentive to originate subprime mortgages because they could collect origination fees and then sell the mortgage.

Explain what Phillips curves are and what relationship they postulate between inflation and unemployment.Draw a graph to support your response.

One cannot understand the debt obligations stemming from health care and Social Security by looking at current deficit statistics.

Who will NOT be hurt if the U.S.monetizes its debt?

Country X is practicing expansionary monetary policy.This drives down the price of its imports and drives up the price of its exports.

Suppose the Federal Reserve announces that its policy will increase the supply of money next year.This announcement can be expected to:

The decrease in short-run aggregate supply during the Great Recession was caused by:

The natural rate of unemployment is the rate at which inflation equals expected inflation,resulting in zero price pressures in the economy.

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

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Exam 14: Macroeconomic Policy: Challenges in a Global Economy

Describe stagflation,and give an example of when and why stagflation occurred in the United States.

According to the equation for the Phillips curve,if nominal wages and labor productivity both rise by 3%:

Expectations theories developed by Keynes,Friedman,and Lucas use the same basic concept to describe the formation of expectations.

Milton Friedman once said,"Inflation is the one form of taxation that can be imposed without legislation." What did he mean by this? That is,how does inflation act like a tax,and why is it significant that it can be imposed without legislation?

The Fed risks aborting the recovery if it halts its quantitative easing program too soon.

Monetizing the debt intensifies the burden of existing debt.

The natural rate of unemployment occurs when the rate of increase in the wage is greater than the increase in productivity.

If policymakers use expansionary measures to reduce unemployment below its natural rate,the economy will endure decelerating inflation.

During the period 2008-2009,_______ million people lost their jobs.

An important implication of the long-run Phillips curve is that monetary and demand-side fiscal policies work well in reducing the natural rate of unemployment.

Which of the following was a change in banks' lending practices that contributed to a housing bubble?

A credit default swap:

Banks had an incentive to originate subprime mortgages because they could collect origination fees and then sell the mortgage.

Explain what Phillips curves are and what relationship they postulate between inflation and unemployment.Draw a graph to support your response.

One cannot understand the debt obligations stemming from health care and Social Security by looking at current deficit statistics.

Who will NOT be hurt if the U.S.monetizes its debt?

Country X is practicing expansionary monetary policy.This drives down the price of its imports and drives up the price of its exports.

Suppose the Federal Reserve announces that its policy will increase the supply of money next year.This announcement can be expected to:

The decrease in short-run aggregate supply during the Great Recession was caused by:

The natural rate of unemployment is the rate at which inflation equals expected inflation,resulting in zero price pressures in the economy.

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