Question 1

When the U.S. economy bottomed out during the Great Depression, the unemployment rate hit about ________ percent in ________.

Accepted Answer

A)  9; 1977 
B)  10; 1929 
C)  25; 1933 
D)  10; 2010 
E)  10.5; 1982 
A)  9; 1977 
B)  10; 1929 
C)  25; 1933 
D)  10; 2010 
E)  10.5; 1982

Question 2

Refer to the following figure when answering the next five questions.
Figure 9.2: U.S. Output Fluctuations 1960-2012   
(Source: BEA and CBO, data from Federal Reserve Economic Data, St. Louis Federal Reserve)
-Consider Figure 9.2, which represents $\tilde { Y } _ { t }$ . In approximately what years did the U.S. economy experience its longest economic expansion?

Accepted Answer

A)  1964-1970 
B)  1978-1980 
C)  1996-2001 
D)  1972-1974 
E)  This cannot be determined from the information given. 
A)  1964-1970 
B)  1978-1980 
C)  1996-2001 
D)  1972-1974 
E)  This cannot be determined from the information given.

Question 3

According to the Phillips curve, short-term changes in inflation are due to changes in:

Accepted Answer

A)  interest rates 
B)  unemployment 
C)  short-term output fluctuations 
D)  long-term inflation 
E)  long-term output 
A)  interest rates 
B)  unemployment 
C)  short-term output fluctuations 
D)  long-term inflation 
E)  long-term output

Question 4

One implication of the Keynes quote, "In the long run we are all dead," is:

Accepted Answer

A)  the economy is always in its long-run equilibrium 
B)  we know with certainty what the long run is 
C)  the long run is made up of a sequence of short runs 
D)  there is no difference between the long and short runs 
E)  there is no short run 
A)  the economy is always in its long-run equilibrium 
B)  we know with certainty what the long run is 
C)  the long run is made up of a sequence of short runs 
D)  there is no difference between the long and short runs 
E)  there is no short run

Question 5

Taken together, the Phillips curve and Okun's law imply there is a short-term ________ relationship between ________ and inflation.

Accepted Answer

A)  positive; interest rates 
B)  positive; unemployment 
C)  negative; interest rates 
D)  negative; unemployment 
E)  Not enough information is given. 
A)  positive; interest rates 
B)  positive; unemployment 
C)  negative; interest rates 
D)  negative; unemployment 
E)  Not enough information is given.

Question 6

The Board of Governors of the Federal Reserve is responsible for dating business cycles.

Accepted Answer

A) True 
 B)False

Question 7

Suppose an economy's natural rate of unemployment is 5 percent. If the unemployment rate is 7 percent, according to Okun's law, $\tilde { Y }$ 
is 4 percent.

Accepted Answer

A) True 
 B)False

Question 8

If current output is $Y _ { t } = \$ 12$ billion and potential output $\bar { Y } _ { t } = \$ 11.25$
Billion, then the economy is in a ________ and $\tilde { Y } _ { t }$ Is about ________.

Accepted Answer

A)  boom; $- 6.7$ percent 
B)  recession; $- 6.7$ percent 
C)  recession; $- 6.2$ percent 
D)  boom; 6.7 percent 
E)  None of these answers are correct. 
A)  boom; $- 6.7$ percent 
B)  recession; $- 6.7$ percent 
C)  recession; $- 6.2$ percent 
D)  boom; 6.7 percent 
E)  None of these answers are correct.

Question 9

The Phillips curve in the text shows the ________ relationship between ________ and ________.

Accepted Answer

A)  positive; inflation; unemployment 
B)  positive; inflation; short-term economic fluctuations 
C)  positive; the change in inflation; short-term economic fluctuations 
D)  negative; inflation; unemployment 
E)  negative; the change in inflation; unemployment 
A)  positive; inflation; unemployment 
B)  positive; inflation; short-term economic fluctuations 
C)  positive; the change in inflation; short-term economic fluctuations 
D)  negative; inflation; unemployment 
E)  negative; the change in inflation; unemployment

Question 10

If $\tilde { Y } _ { t } < 0$  , the macroeconomy is in a recession.

Accepted Answer

A) True 
 B)False

Question 11

The relationship between actual output in an economy, the long-run component, and the short-run component is given as: Current output = Long-run trend + Short-run fluctuations.

Accepted Answer

A) True 
 B)False

Question 12

According to Okun's law, if the Federal Reserve wants to reduce unemployment, it should ________ interest rates, which would ________ output.

Accepted Answer

A)  reduce; reduce 
B)  increase; increase 
C)  reduce; increase 
D)  reduce; not change 
E)  not change; increase 
A)  reduce; reduce 
B)  increase; increase 
C)  reduce; increase 
D)  reduce; not change 
E)  not change; increase

Question 13

The Phillips curve in the text shows the ________ relationship between ________ and ________.

Accepted Answer

A)  positive; the change in inflation; short-term economic fluctuations 
B)  negative; the change in inflation; short-term economic fluctuations 
C)  positive; inflation; unemployment 
D)  negative; inflation; unemployment 
E)  negative; the change in inflation; unemployment 
A)  positive; the change in inflation; short-term economic fluctuations 
B)  negative; the change in inflation; short-term economic fluctuations 
C)  positive; inflation; unemployment 
D)  negative; inflation; unemployment 
E)  negative; the change in inflation; unemployment

Question 14

Defining $Y _ { t }$ as current output, $\bar { Y } _ { t }$
As potential output, and $\tilde { Y } _ { t }$
As short-run fluctuations, which of the following equations is correct?

Accepted Answer

A)  $Y _ { t } = \tilde { Y } _ { t } - \bar { Y } _ { t }$ 
B)  $Y _ { t } = \bar { Y } _ { t } + \tilde { Y } _ { t }$ 
C)  $\bar { Y } _ { t } = \tilde { Y } _ { t }$ 
D)  $Y _ { t } = 0$ 
E)  $Y _ { t } = \frac { \tilde { Y } _ { t } } { \bar { Y } _ { t } }$ 
A)  $Y _ { t } = \tilde { Y } _ { t } - \bar { Y } _ { t }$ 
B)  $Y _ { t } = \bar { Y } _ { t } + \tilde { Y } _ { t }$ 
C)  $\bar { Y } _ { t } = \tilde { Y } _ { t }$ 
D)  $Y _ { t } = 0$ 
E)  $Y _ { t } = \frac { \tilde { Y } _ { t } } { \bar { Y } _ { t } }$

Question 15

In the text, Okun's law is given as:

Accepted Answer

A)  $u - \bar { u } = - 2 \times \frac { \tilde { Y } } { \bar { Y } }$ 
B)  $\frac { u } { \bar { u } } = - 1 / 2 \times ( \tilde { Y } - \bar { Y } )$ 
C)  $u = - 2 \bar { Y }$ 
D)  $\bar { u } - u = - 2 \times \tilde { y }$ 
E)  $u - \bar { u } = - 1 / 2 \times \tilde { Y }$ 
A)  $u - \bar { u } = - 2 \times \frac { \tilde { Y } } { \bar { Y } }$ 
B)  $\frac { u } { \bar { u } } = - 1 / 2 \times ( \tilde { Y } - \bar { Y } )$ 
C)  $u = - 2 \bar { Y }$ 
D)  $\bar { u } - u = - 2 \times \tilde { y }$ 
E)  $u - \bar { u } = - 1 / 2 \times \tilde { Y }$

Question 16

Refer to the following figure when answering  
Figure 9.1: Output versus Time 
 
-Consider Figure 9.1. The dashed line is potential output and the solid line is current output; therefore:

Accepted Answer

A)  areas a and b are booms 
B)  area b represents an economic boom, and area a is a recession 
C)  the economy is in neither a recession nor a boom in areas a and b 
D)  area a represents an economic boom, and area b is a recession 
E)  areas a and b are expansions 
A)  areas a and b are booms 
B)  area b represents an economic boom, and area a is a recession 
C)  the economy is in neither a recession nor a boom in areas a and b 
D)  area a represents an economic boom, and area b is a recession 
E)  areas a and b are expansions

Question 17

Which of the following is NOT an example of a short-term macroeconomic "shock"?

Accepted Answer

A)  political unrest 
B)  a change in the tax code 
C)  a drought 
D)  increased military spending 
E)  None of these answers are correct. 
A)  political unrest 
B)  a change in the tax code 
C)  a drought 
D)  increased military spending 
E)  None of these answers are correct.

Question 18

Defining $Y _ { t }$ as current output, $\bar { Y } _ { t }$
As potential output, and $\tilde { Y } _ { t }$
As short-run fluctuations, which of the following equations does the text use to measure the fluctuations component of output?

Accepted Answer

A)  $\tilde { Y } _ { t } = \frac { Y _ { t } + \bar { Y } _ { t } } { \bar { Y } _ { t } }$ 
B)  $\tilde { Y } _ { t } = Y _ { t } - \bar { Y } _ { t }$ 
C)  $\tilde { Y } _ { t } = \frac { Y _ { t } - \bar { Y } _ { t } } { \bar { Y } _ { t } }$ 
D)  $\tilde { Y } _ { t } = \frac { \bar { Y } _ { t } - Y _ { t } } { \bar { Y } _ { t } }$ 
E)  $\tilde { Y } _ { t } = \frac { \bar { Y } _ { t } - Y _ { t } } { Y _ { t } }$ 
A)  $\tilde { Y } _ { t } = \frac { Y _ { t } + \bar { Y } _ { t } } { \bar { Y } _ { t } }$ 
B)  $\tilde { Y } _ { t } = Y _ { t } - \bar { Y } _ { t }$ 
C)  $\tilde { Y } _ { t } = \frac { Y _ { t } - \bar { Y } _ { t } } { \bar { Y } _ { t } }$ 
D)  $\tilde { Y } _ { t } = \frac { \bar { Y } _ { t } - Y _ { t } } { \bar { Y } _ { t } }$ 
E)  $\tilde { Y } _ { t } = \frac { \bar { Y } _ { t } - Y _ { t } } { Y _ { t } }$

Question 19

Which of the following is NOT an example of a short-term macroeconomic "shock"?

Accepted Answer

A)  a change in the tax code 
B)  pork-barrel spending 
C)  increased military spending 
D)  planned investment expenditures 
E)  political unrest 
A)  a change in the tax code 
B)  pork-barrel spending 
C)  increased military spending 
D)  planned investment expenditures 
E)  political unrest

Question 20

According to the text, the slope of the Phillips curve in the United States is about -1/3.

Accepted Answer

A) True 
 B)False

When the U.S. economy bottomed out during the Great Depression, the unemployment rate hit about percent in .

According to the Phillips curve, short-term changes in inflation are due to changes in:

One implication of the Keynes quote, "In the long run we are all dead," is:

Taken together, the Phillips curve and Okun's law imply there is a short-term relationship between and inflation.

The Board of Governors of the Federal Reserve is responsible for dating business cycles.

Suppose an economy's natural rate of unemployment is 5 percent. If the unemployment rate is 7 percent, according to Okun's law, $\tilde { Y }$ is 4 percent.

If current output is $Y _ { t } = \$ 12$ billion and potential output $\bar { Y } _ { t } = \$ 11.25$ Billion, then the economy is in a ________ and $\tilde { Y } _ { t }$ Is about ________.

The Phillips curve in the text shows the relationship between and .

If $\tilde { Y } _ { t } < 0$ , the macroeconomy is in a recession.

The relationship between actual output in an economy, the long-run component, and the short-run component is given as: Current output = Long-run trend + Short-run fluctuations.

According to Okun's law, if the Federal Reserve wants to reduce unemployment, it should interest rates, which would output.

The Phillips curve in the text shows the relationship between and .

Defining $Y _ { t }$ as current output, $\bar { Y } _ { t }$ As potential output, and $\tilde { Y } _ { t }$ As short-run fluctuations, which of the following equations is correct?

In the text, Okun's law is given as:

Refer to the following figure when answering Figure 9.1: Output versus Time -Consider Figure 9.1. The dashed line is potential output and the solid line is current output; therefore:

Which of the following is NOT an example of a short-term macroeconomic "shock"?

Defining $Y _ { t }$ as current output, $\bar { Y } _ { t }$ As potential output, and $\tilde { Y } _ { t }$ As short-run fluctuations, which of the following equations does the text use to measure the fluctuations component of output?

Which of the following is NOT an example of a short-term macroeconomic "shock"?

According to the text, the slope of the Phillips curve in the United States is about -1/3.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 9: An Introduction to the Short Run

When the U.S. economy bottomed out during the Great Depression, the unemployment rate hit about ________ percent in ________.

According to the Phillips curve, short-term changes in inflation are due to changes in:

One implication of the Keynes quote, "In the long run we are all dead," is:

Taken together, the Phillips curve and Okun's law imply there is a short-term ________ relationship between ________ and inflation.

The Board of Governors of the Federal Reserve is responsible for dating business cycles.

Suppose an economy's natural rate of unemployment is 5 percent. If the unemployment rate is 7 percent, according to Okun's law, Y~\tilde { Y }Y~ is 4 percent.

If current output is Yt=$12Y _ { t } = \$ 12Yt​=$12 billion and potential output Yˉt=$11.25\bar { Y } _ { t } = \$ 11.25Yˉt​=$11.25 Billion, then the economy is in a ________ and Y~t\tilde { Y } _ { t }Y~t​ Is about ________.

The Phillips curve in the text shows the ________ relationship between ________ and ________.

If Y~t<0\tilde { Y } _ { t } < 0Y~t​<0 , the macroeconomy is in a recession.

The relationship between actual output in an economy, the long-run component, and the short-run component is given as: Current output = Long-run trend + Short-run fluctuations.

According to Okun's law, if the Federal Reserve wants to reduce unemployment, it should ________ interest rates, which would ________ output.

The Phillips curve in the text shows the ________ relationship between ________ and ________.

Defining YtY _ { t }Yt​ as current output, Yˉt\bar { Y } _ { t }Yˉt​ As potential output, and Y~t\tilde { Y } _ { t }Y~t​ As short-run fluctuations, which of the following equations is correct?

In the text, Okun's law is given as:

Refer to the following figure when answering Figure 9.1: Output versus Time -Consider Figure 9.1. The dashed line is potential output and the solid line is current output; therefore:

Which of the following is NOT an example of a short-term macroeconomic "shock"?

Defining YtY _ { t }Yt​ as current output, Yˉt\bar { Y } _ { t }Yˉt​ As potential output, and Y~t\tilde { Y } _ { t }Y~t​ As short-run fluctuations, which of the following equations does the text use to measure the fluctuations component of output?

Which of the following is NOT an example of a short-term macroeconomic "shock"?

According to the text, the slope of the Phillips curve in the United States is about -1/3.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

When the U.S. economy bottomed out during the Great Depression, the unemployment rate hit about percent in .

Taken together, the Phillips curve and Okun's law imply there is a short-term relationship between and inflation.

Suppose an economy's natural rate of unemployment is 5 percent. If the unemployment rate is 7 percent, according to Okun's law, $\tilde { Y }$ is 4 percent.

If current output is $Y _ { t } = \$ 12$ billion and potential output $\bar { Y } _ { t } = \$ 11.25$ Billion, then the economy is in a ________ and $\tilde { Y } _ { t }$ Is about ________.

The Phillips curve in the text shows the relationship between and .

If $\tilde { Y } _ { t } < 0$ , the macroeconomy is in a recession.

According to Okun's law, if the Federal Reserve wants to reduce unemployment, it should interest rates, which would output.

The Phillips curve in the text shows the relationship between and .

Defining $Y _ { t }$ as current output, $\bar { Y } _ { t }$ As potential output, and $\tilde { Y } _ { t }$ As short-run fluctuations, which of the following equations is correct?

Defining $Y _ { t }$ as current output, $\bar { Y } _ { t }$ As potential output, and $\tilde { Y } _ { t }$ As short-run fluctuations, which of the following equations does the text use to measure the fluctuations component of output?