Question 1

In the classical model,a temporary increase in government purchases causes

Accepted Answer

A) a decrease in output and the real interest rate. 
B) a decrease in output and an increase in the real interest rate. 
C) an increase in output and a decrease in the real interest rate. 
D) an increase in output and the real interest rate. 
A) a decrease in output and the real interest rate. 
B) a decrease in output and an increase in the real interest rate. 
C) an increase in output and a decrease in the real interest rate. 
D) an increase in output and the real interest rate.

Question 2

A temporary decrease in government purchases in the classical model would

Accepted Answer

A) shift the production function to the left. 
B) shift the marginal product of labor curve to the right. 
C) shift the labor demand curve to the left. 
D) shift the labor supply curve to the left. 
A) shift the production function to the left. 
B) shift the marginal product of labor curve to the right. 
C) shift the labor demand curve to the left. 
D) shift the labor supply curve to the left.

Question 3

According to the misperceptions theory,an unanticipated decrease in the money supply shifts the AD curve ________,causing output to ________ in the short run.

Accepted Answer

A) up and to the right; rise 
B) up and to the right; fall 
C) down and to the left; rise 
D) down and to the left; fall 
A) up and to the right; rise 
B) up and to the right; fall 
C) down and to the left; rise 
D) down and to the left; fall

Question 4

According to the real business cycle theory,what is the principal cause of business cycle fluctuations?

Accepted Answer

According to the real business

Question 5

According to classical economists,unemployment rises in recessions due to an increase in ________ unemployment,not ________ unemployment.

Accepted Answer

A) cyclical; frictional and structural 
B) frictional and cyclical; structural 
C) structural; frictional and cyclical 
D) frictional and structural; cyclical 
A) cyclical; frictional and structural 
B) frictional and cyclical; structural 
C) structural; frictional and cyclical 
D) frictional and structural; cyclical

Question 6

If producers believe that the increase in their relative prices is small relative to the increase in the general price level,then the slope of the short-run aggregate supply curve will be

Accepted Answer

A) zero. 
B) small. 
C) large. 
D) negative. 
A) zero. 
B) small. 
C) large. 
D) negative.

Question 7

Short-run aggregate supply is greater than long-run aggregate supply in the misperceptions theory if

Accepted Answer

A) the actual price level is greater than the expected price level. 
B) the actual price level equals the expected price level. 
C) the actual price level is less than the expected price level. 
D) output is less than its full-employment level. 
A) the actual price level is greater than the expected price level. 
B) the actual price level equals the expected price level. 
C) the actual price level is less than the expected price level. 
D) output is less than its full-employment level.

Question 8

Which of the following is an example of a productivity shock?

Accepted Answer

A) The introduction of new management techniques 
B) A change in taxes on corporate profits 
C) A change in the level of government transfer programs 
D) An increase in the money supply 
A) The introduction of new management techniques 
B) A change in taxes on corporate profits 
C) A change in the level of government transfer programs 
D) An increase in the money supply

Question 9

Braun and Evans found that

Accepted Answer

A) the measured Solow residual varied sharply over the seasons. 
B) electricity use by producers rises sharply in economic upturns. 
C) professional forecasters have rational expectations of inflation. 
D) shocks to fiscal policy are the main source of business cycle fluctuations. 
A) the measured Solow residual varied sharply over the seasons. 
B) electricity use by producers rises sharply in economic upturns. 
C) professional forecasters have rational expectations of inflation. 
D) shocks to fiscal policy are the main source of business cycle fluctuations.

Question 10

You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following EXCEPT

Accepted Answer

A) large gold discoveries that increased the money supply preceded an economic boom. 
B) a change in monetary institutions preceded a boom or recession. 
C) a change in the leadership of the Fed and its policy was followed by noticeable changes in the money supply and a recession or inflation. 
D) the fact that every recession was preceded by a drop in the money supply. 
A) large gold discoveries that increased the money supply preceded an economic boom. 
B) a change in monetary institutions preceded a boom or recession. 
C) a change in the leadership of the Fed and its policy was followed by noticeable changes in the money supply and a recession or inflation. 
D) the fact that every recession was preceded by a drop in the money supply.

Question 11

If producers have imperfect information about the general price level and sometimes misinterpret changes in the general price level as changes in relative prices,then

Accepted Answer

A) the short-run aggregate supply curve is vertical. 
B) the short-run aggregate supply curve slopes upward. 
C) the aggregate demand curve is vertical. 
D) the aggregate demand curve is horizontal. 
A) the short-run aggregate supply curve is vertical. 
B) the short-run aggregate supply curve slopes upward. 
C) the aggregate demand curve is vertical. 
D) the aggregate demand curve is horizontal.

Question 12

The formula Y / (KaN1-a)provides a calculation of

Accepted Answer

A) x-efficiency. 
B) dynamic efficiency. 
C) economywide monopoly power. 
D) the Solow residual. 
A) x-efficiency. 
B) dynamic efficiency. 
C) economywide monopoly power. 
D) the Solow residual.

Question 13

A temporary increase in government purchases in the classical model would

Accepted Answer

A) shift the production function to the right. 
B) shift the marginal product of labor curve to the left. 
C) shift the labor demand curve to the right. 
D) shift the labor supply curve to the right. 
A) shift the production function to the right. 
B) shift the marginal product of labor curve to the left. 
C) shift the labor demand curve to the right. 
D) shift the labor supply curve to the right.

Question 14

Assuming money neutrality in the classical model,a 10% increase in the nominal money supply would cause

Accepted Answer

A) a 10% increase in the real money supply. 
B) a 10% decrease in the real money supply. 
C) no change in the real money supply. 
D) a less-than-10% change in the price level due to a shift in the aggregate supply curve. 
A) a 10% increase in the real money supply. 
B) a 10% decrease in the real money supply. 
C) no change in the real money supply. 
D) a less-than-10% change in the price level due to a shift in the aggregate supply curve.

Question 15

Which of the following statements is true about the misperceptions theory?

Accepted Answer

A) Both anticipated and unanticipated changes in the nominal money supply have real effects on the economy. 
B) Neither anticipated nor unanticipated changes in the nominal money supply has real effects on the economy. 
C) Unanticipated changes in the nominal money supply have real effects,but anticipated changes are neutral. 
D) Anticipated changes in the nominal money supply have real effects,but unanticipated changes are neutral. 
A) Both anticipated and unanticipated changes in the nominal money supply have real effects on the economy. 
B) Neither anticipated nor unanticipated changes in the nominal money supply has real effects on the economy. 
C) Unanticipated changes in the nominal money supply have real effects,but anticipated changes are neutral. 
D) Anticipated changes in the nominal money supply have real effects,but unanticipated changes are neutral.

Question 16

The idea that expected future increases in output cause increases in the current money supply and that expected future decreases in output cause decreases in the current money supply,rather than the other way around,is known as

Accepted Answer

A) Granger causality. 
B) money neutrality. 
C) nominal adjustment. 
D) reverse causation. 
A) Granger causality. 
B) money neutrality. 
C) nominal adjustment. 
D) reverse causation.

Question 17

How do RBC economists face the business cycle fact that inflation is procyclical?

Accepted Answer

A) They argue that even though inflation doesn't fit their theory,everything else does,and inflation is not important. 
B) They note that inflation would not be procyclical if monetary policy were conducted properly. 
C) They argue that inflation is procyclical only because monetary policy shocks are the main cause of business cycles. 
D) They use alternative statistical methods that suggest that inflation is countercyclical. 
A) They argue that even though inflation doesn't fit their theory,everything else does,and inflation is not important. 
B) They note that inflation would not be procyclical if monetary policy were conducted properly. 
C) They argue that inflation is procyclical only because monetary policy shocks are the main cause of business cycles. 
D) They use alternative statistical methods that suggest that inflation is countercyclical.

Question 18

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift ________ to restore general equilibrium; as it does so,the price level ________.

Accepted Answer

A) downward; rises 
B) downward; falls 
C) upward; rises 
D) upward; falls 
A) downward; rises 
B) downward; falls 
C) upward; rises 
D) upward; falls

Question 19

-A classical economy is described by the following equations:
Government spending and taxes are equal where T = G = 200.The nominal money supply M = 3560.
(a)What are the equilibrium values of the real interest rate,the price level,consumption,and investment?
(b)Suppose an economic shock increases desired investment by 10,so it is now Id = 360 - 100r.How does this affect the equilibrium values of the real interest rate,the price level,consumption,and investment?
(c)Returning to the initial situation in part (a),suppose an economic shock increases desired consumption by 10,so it is now Cd = 510 + 0.5 (Y - T)- 100r.How does this affect the equilibrium values of the real interest rate,the price level,consumption,and investment?

Accepted Answer

(a) @#LAT-DLM&. Set @#LAT-DLM& : @#LAT-DLM&, so @#LAT-DLM&. With @#LAT-DLM&. The

Question 20

A jobless recovery occurs when

Accepted Answer

A) no jobs are created in an economy after a recession ends. 
B) employment continues to fall at the beginning of a recovery. 
C) only low quality jobs are created in a recovery. 
D) most of the new jobs created in a recovery are overseas. 
A) no jobs are created in an economy after a recession ends. 
B) employment continues to fall at the beginning of a recovery. 
C) only low quality jobs are created in a recovery. 
D) most of the new jobs created in a recovery are overseas.

In the classical model,a temporary increase in government purchases causes

A temporary decrease in government purchases in the classical model would

According to the misperceptions theory,an unanticipated decrease in the money supply shifts the AD curve ,causing output to in the short run.

According to the real business cycle theory,what is the principal cause of business cycle fluctuations?

According to classical economists,unemployment rises in recessions due to an increase in unemployment,not unemployment.

If producers believe that the increase in their relative prices is small relative to the increase in the general price level,then the slope of the short-run aggregate supply curve will be

Short-run aggregate supply is greater than long-run aggregate supply in the misperceptions theory if

Which of the following is an example of a productivity shock?

Braun and Evans found that

You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following EXCEPT

If producers have imperfect information about the general price level and sometimes misinterpret changes in the general price level as changes in relative prices,then

The formula Y / (KaN1-a)provides a calculation of

A temporary increase in government purchases in the classical model would

Assuming money neutrality in the classical model,a 10% increase in the nominal money supply would cause

Which of the following statements is true about the misperceptions theory?

The idea that expected future increases in output cause increases in the current money supply and that expected future decreases in output cause decreases in the current money supply,rather than the other way around,is known as

How do RBC economists face the business cycle fact that inflation is procyclical?

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift to restore general equilibrium; as it does so,the price level .

A jobless recovery occurs when

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, Output, and Employment

Consumption, Saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, Money, and Prices

Business Cycles

The IS-LM/AD-AS Model

Keynesianism: The Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates,Business Cycles,and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 10: Classical Business Cycle Analysis

In the classical model,a temporary increase in government purchases causes

A temporary decrease in government purchases in the classical model would

According to the misperceptions theory,an unanticipated decrease in the money supply shifts the AD curve ________,causing output to ________ in the short run.

According to the real business cycle theory,what is the principal cause of business cycle fluctuations?

According to classical economists,unemployment rises in recessions due to an increase in ________ unemployment,not ________ unemployment.

If producers believe that the increase in their relative prices is small relative to the increase in the general price level,then the slope of the short-run aggregate supply curve will be

Short-run aggregate supply is greater than long-run aggregate supply in the misperceptions theory if

Which of the following is an example of a productivity shock?

Braun and Evans found that

You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following EXCEPT

If producers have imperfect information about the general price level and sometimes misinterpret changes in the general price level as changes in relative prices,then

The formula Y / (KaN1-a)provides a calculation of

A temporary increase in government purchases in the classical model would

Assuming money neutrality in the classical model,a 10% increase in the nominal money supply would cause

Which of the following statements is true about the misperceptions theory?

The idea that expected future increases in output cause increases in the current money supply and that expected future decreases in output cause decreases in the current money supply,rather than the other way around,is known as

How do RBC economists face the business cycle fact that inflation is procyclical?

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift ________ to restore general equilibrium; as it does so,the price level ________.

A jobless recovery occurs when

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, Output, and Employment

Consumption, Saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, Money, and Prices

Business Cycles

The IS-LM/AD-AS Model

Keynesianism: The Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates,Business Cycles,and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

According to the misperceptions theory,an unanticipated decrease in the money supply shifts the AD curve ,causing output to in the short run.

According to classical economists,unemployment rises in recessions due to an increase in unemployment,not unemployment.

According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift to restore general equilibrium; as it does so,the price level .