Question 1

_____ was a _____ economist who believed that _____ in wages and prices could block adjustments to full employment.

Accepted Answer

A)  Adam Smith;British;flexibility 
B)  Milton Friedman;U.S. ;inflexibility 
C)  John Maynard Keynes;British;stickiness 
D)  Robert Lucas;U.S. ;stickiness 
A)  Adam Smith;British;flexibility 
B)  Milton Friedman;U.S. ;inflexibility 
C)  John Maynard Keynes;British;stickiness 
D)  Robert Lucas;U.S. ;stickiness

Question 2

Real business cycle theory suggests the business cycle is caused by:

Accepted Answer

A)  discretionary monetary policy. 
B)  fluctuations in the rate of productivity. 
C)  "animal spirits." 
D)  protectionism. 
A)  discretionary monetary policy. 
B)  fluctuations in the rate of productivity. 
C)  "animal spirits." 
D)  protectionism.

Question 3

According to the theory of new classical economics,if productivity decreases,the aggregate supply curve shifts _____,the price level rises,and aggregate output_____.

Accepted Answer

A)  right;increases 
B)  left;remains constant 
C)  right;decreases 
D)  left;decreases 
A)  right;increases 
B)  left;remains constant 
C)  right;decreases 
D)  left;decreases

Question 4

The Great Moderation consensus agreement that a decrease in the interest rate was the best policy for fighting a recession was ineffective in the Great Recession because:

Accepted Answer

A)  the central bank bought government securities,but interest rates did not fall. 
B)  interest rates were already close to zero. 
C)  financial institutions were engaging in maturity transformation. 
D)  the federal government increased taxes. 
A)  the central bank bought government securities,but interest rates did not fall. 
B)  interest rates were already close to zero. 
C)  financial institutions were engaging in maturity transformation. 
D)  the federal government increased taxes.

Question 5

Under which conditions do some macroeconomists believe the natural rate hypothesis does NOT work?

Accepted Answer

A)  periods of rapidly rising inflation 
B)  high but constant inflation 
C)  low or negative inflation 
D)  high economic growth 
A)  periods of rapidly rising inflation 
B)  high but constant inflation 
C)  low or negative inflation 
D)  high economic growth

Question 6

Classical economists believe that:

Accepted Answer

A)  monetary policy is not useful in fighting recessions. 
B)  discretionary fiscal policies are useful for dampening business cycle fluctuations. 
C)  rational expectations are held by most of the public. 
D)  short-run goals are more important than long-run goals. 
A)  monetary policy is not useful in fighting recessions. 
B)  discretionary fiscal policies are useful for dampening business cycle fluctuations. 
C)  rational expectations are held by most of the public. 
D)  short-run goals are more important than long-run goals.

Question 7

Rational expectations theory suggests that:

Accepted Answer

A)  monetary policy that is expected will have the greatest impact on changing output levels. 
B)  policies that are expected will have no effect on output or unemployment. 
C)  economic agents take into account past actions only to make their current decisions. 
D)  discretionary policies are best at bringing about changes in output. 
A)  monetary policy that is expected will have the greatest impact on changing output levels. 
B)  policies that are expected will have no effect on output or unemployment. 
C)  economic agents take into account past actions only to make their current decisions. 
D)  discretionary policies are best at bringing about changes in output.

Question 8

If real business cycle theory uses an upward-sloping aggregate _____ curve,aggregate _____ is _____.

Accepted Answer

A)  demand;supply;relevant 
B)  demand;supply;irrelevant 
C)  supply;demand;irrelevant 
D)  supply;demand;relevant 
A)  demand;supply;relevant 
B)  demand;supply;irrelevant 
C)  supply;demand;irrelevant 
D)  supply;demand;relevant

Question 9

In a liquidity trap:

Accepted Answer

A)  fiscal policy becomes ineffective because of the high budget deficit. 
B)  monetary policy becomes ineffective because the nominal interest rate is close to the zero bound. 
C)  the aggregate price level becomes downwardly sticky. 
D)  any increase in government spending drives out planned investment spending. 
A)  fiscal policy becomes ineffective because of the high budget deficit. 
B)  monetary policy becomes ineffective because the nominal interest rate is close to the zero bound. 
C)  the aggregate price level becomes downwardly sticky. 
D)  any increase in government spending drives out planned investment spending.

___ was a _ economist who believed that ___ in wages and prices could block adjustments to full employment.

Real business cycle theory suggests the business cycle is caused by:

According to the theory of new classical economics,if productivity decreases,the aggregate supply curve shifts _,the price level rises,and aggregate output_.

The Great Moderation consensus agreement that a decrease in the interest rate was the best policy for fighting a recession was ineffective in the Great Recession because:

Under which conditions do some macroeconomists believe the natural rate hypothesis does NOT work?

Classical economists believe that:

Rational expectations theory suggests that:

If real business cycle theory uses an upward-sloping aggregate ___ curve,aggregate _ is ___.

In a liquidity trap:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

International Macroeconomics

Graphs in Economics

Filters

Exam 17: Macroeconomics: Events and Ideas

_____ was a _____ economist who believed that _____ in wages and prices could block adjustments to full employment.

Real business cycle theory suggests the business cycle is caused by:

According to the theory of new classical economics,if productivity decreases,the aggregate supply curve shifts _____,the price level rises,and aggregate output_____.

The Great Moderation consensus agreement that a decrease in the interest rate was the best policy for fighting a recession was ineffective in the Great Recession because:

Under which conditions do some macroeconomists believe the natural rate hypothesis does NOT work?

Classical economists believe that:

Rational expectations theory suggests that:

If real business cycle theory uses an upward-sloping aggregate _____ curve,aggregate _____ is _____.

In a liquidity trap:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

International Macroeconomics

Graphs in Economics

Filters

___ was a _ economist who believed that ___ in wages and prices could block adjustments to full employment.

According to the theory of new classical economics,if productivity decreases,the aggregate supply curve shifts _,the price level rises,and aggregate output_.

If real business cycle theory uses an upward-sloping aggregate ___ curve,aggregate _ is ___.