Question 1

In a binding situation,a positive cost shock decreases output.

Accepted Answer

A) True 
 B)False

Question 2

Since the end of 2008,there has been a zero interest rate bound in the U.S.economy.

Accepted Answer

A) True 
 B)False

Question 3

Other things equal,cost-push inflation results in output ________ and the price level ________.

Accepted Answer

A) increasing; increasing 
B) increasing; decreasing 
C) decreasing; increasing 
D) decreasing; decreasing 
A) increasing; increasing 
B) increasing; decreasing 
C) decreasing; increasing 
D) decreasing; decreasing

Question 4

During the recession of 1980-1982,the Fed raised the interest rate to fight inflation.

Accepted Answer

A) True 
 B)False

Question 5

The Fed acted aggressively in lowering the interest rate during the recession(s)of

Accepted Answer

A) 1974-1975 and 1980-1982. 
B) 1974-1975 and 2008-2009. 
C) 1990-1991,2001,and 2008-2009. 
D) 1980-1982,1990-1991,and 2008-2009. 
A) 1974-1975 and 1980-1982. 
B) 1974-1975 and 2008-2009. 
C) 1990-1991,2001,and 2008-2009. 
D) 1980-1982,1990-1991,and 2008-2009.

Question 6

Refer to the information provided in Figure 13.3 below to answer the questions that follow.
   Figure 13.3
-Refer to Figure 13.3.Assume the economy is at Point A.Higher oil prices shift the aggregate supply curve to AS2.If the government decides to counter the effects of higher oil prices by increasing net taxes,then the price level will be ________ than P2 and output will be ________ than Y2.

Accepted Answer

A) greater; greater 
B) greater; less 
C) less; less 
D) less; greater 
A) greater; greater 
B) greater; less 
C) less; less 
D) less; greater

Question 7

The Fed generally had high interest rates ________ as it fought inflation.

Accepted Answer

A) in the 1970s and early 1980s 
B) in the 1980s and 1990s 
C) in the late-1990s 
D) in the 2000s 
A) in the 1970s and early 1980s 
B) in the 1980s and 1990s 
C) in the late-1990s 
D) in the 2000s

Question 8

There is evidence that the Fed,under chairman Ben Bernanke,has engaged in inflation targeting.

Accepted Answer

A) True 
 B)False

Question 9

If the economy is on the steep portion of the AS curve and taxes decrease,________ crowds out ________.

Accepted Answer

A) consumption; planned investment 
B) government spending; planned investment 
C) planned investment; consumption 
D) planned investment; government spending 
A) consumption; planned investment 
B) government spending; planned investment 
C) planned investment; consumption 
D) planned investment; government spending

Question 10

Refer to the information provided in Figure 13.3 below to answer the questions that follow.
   Figure 13.3
-Refer to Figure 13.3.Assume the economy is at Point A.Higher oil prices shift the aggregate supply curve to AS2.If the government decides to counter the effects of higher oil prices by increasing government spending,then the price level will be ________ than P2 and output will be ________ than Y2.

Accepted Answer

A) greater; greater 
B) greater; less 
C) less; less 
D) less; greater 
A) greater; greater 
B) greater; less 
C) less; less 
D) less; greater

Question 11

Which of the following is an example of an expansionary fiscal policy?

Accepted Answer

A) the Fed selling government securities in the open market 
B) the federal government increasing the marginal tax rate on incomes above $200,000 
C) the federal government increasing the amount of money spent on public health programs 
D) the federal government reducing pollution standards to allow firms to produce more output 
A) the Fed selling government securities in the open market 
B) the federal government increasing the marginal tax rate on incomes above $200,000 
C) the federal government increasing the amount of money spent on public health programs 
D) the federal government reducing pollution standards to allow firms to produce more output

Question 12

An increase in AD will primarily increase the price level when the economy is on the steep part of the AS curve.

Accepted Answer

A) True 
 B)False

Question 13

If the long-run aggregate supply curve is vertical,the multiplier effect of a change in net taxes on aggregate output in the long run

Accepted Answer

A) depends on the price level. 
B) is one. 
C) is zero. 
D) is infinitely large. 
A) depends on the price level. 
B) is one. 
C) is zero. 
D) is infinitely large.

Question 14

Cost-push inflation corresponds to ________ output and demand-pull inflation corresponds to ________ output.

Accepted Answer

A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower 
A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower

Question 15

An economic condition characterized by high unemployment and excessive inflation is called

Accepted Answer

A) stagflation. 
B) recessionary downturn. 
C) expansionary growth. 
D) depression. 
A) stagflation. 
B) recessionary downturn. 
C) expansionary growth. 
D) depression.

Question 16

Since 1970,the Fed generally ________ the interest rate when inflation was ________.

Accepted Answer

A) raised; high 
B) raised; low 
C) lowered; high 
D) The Fed has maintained a stable interest rate since 1970. 
A) raised; high 
B) raised; low 
C) lowered; high 
D) The Fed has maintained a stable interest rate since 1970.

Question 17

A binding situation occurred during the recession of

Accepted Answer

A) 1974-1975. 
B) 1980-1982. 
C) 1990-1991. 
D) 2008-2009. 
A) 1974-1975. 
B) 1980-1982. 
C) 1990-1991. 
D) 2008-2009.

Question 18

In a binding situation,a positive cost shock will cause ________ in output and ________ in the price level.

Accepted Answer

A) no change; no change 
B) a decrease; an increase 
C) no change; an increase 
D) a decrease; no change 
A) no change; no change 
B) a decrease; an increase 
C) no change; an increase 
D) a decrease; no change

Question 19

Refer to the information provided in Figure 13.3 below to answer the questions that follow.
   Figure 13.3
-Refer to Figure 13.3.Cost-push inflation occurs if

Accepted Answer

A) the economy moves from Point A to Point B on aggregate supply curve AS1. 
B) the economy moves from Point A to Point C on the aggregate supply curve AS1. 
C) the aggregate supply curve shifts from AS1 to AS0. 
D) the aggregate supply curve shifts from AS1 to AS2. 
A) the economy moves from Point A to Point B on aggregate supply curve AS1. 
B) the economy moves from Point A to Point C on the aggregate supply curve AS1. 
C) the aggregate supply curve shifts from AS1 to AS0. 
D) the aggregate supply curve shifts from AS1 to AS2.

Question 20

A sudden increase in the price of oil causes a ________ inflation and ________ output.

Accepted Answer

A) demand-pull; lower 
B) cost-push; higher 
C) demand-pull; higher 
D) cost-push; lower 
A) demand-pull; lower 
B) cost-push; higher 
C) demand-pull; higher 
D) cost-push; lower

In a binding situation,a positive cost shock decreases output.

Since the end of 2008,there has been a zero interest rate bound in the U.S.economy.

Other things equal,cost-push inflation results in output and the price level .

During the recession of 1980-1982,the Fed raised the interest rate to fight inflation.

The Fed acted aggressively in lowering the interest rate during the recession(s)of

The Fed generally had high interest rates ________ as it fought inflation.

There is evidence that the Fed,under chairman Ben Bernanke,has engaged in inflation targeting.

If the economy is on the steep portion of the AS curve and taxes decrease, crowds out .

Which of the following is an example of an expansionary fiscal policy?

An increase in AD will primarily increase the price level when the economy is on the steep part of the AS curve.

If the long-run aggregate supply curve is vertical,the multiplier effect of a change in net taxes on aggregate output in the long run

Cost-push inflation corresponds to output and demand-pull inflation corresponds to output.

An economic condition characterized by high unemployment and excessive inflation is called

Since 1970,the Fed generally the interest rate when inflation was .

A binding situation occurred during the recession of

In a binding situation,a positive cost shock will cause in output and in the price level.

Refer to the information provided in Figure 13.3 below to answer the questions that follow. Figure 13.3 -Refer to Figure 13.3.Cost-push inflation occurs if

A sudden increase in the price of oil causes a inflation and output.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment,inflation,and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

Exam 13: Policy Effects and Costs Shocks in the Asad Model

In a binding situation,a positive cost shock decreases output.

Since the end of 2008,there has been a zero interest rate bound in the U.S.economy.

Other things equal,cost-push inflation results in output ________ and the price level ________.

During the recession of 1980-1982,the Fed raised the interest rate to fight inflation.

The Fed acted aggressively in lowering the interest rate during the recession(s)of

The Fed generally had high interest rates ________ as it fought inflation.

There is evidence that the Fed,under chairman Ben Bernanke,has engaged in inflation targeting.

If the economy is on the steep portion of the AS curve and taxes decrease,________ crowds out ________.

Which of the following is an example of an expansionary fiscal policy?

An increase in AD will primarily increase the price level when the economy is on the steep part of the AS curve.

If the long-run aggregate supply curve is vertical,the multiplier effect of a change in net taxes on aggregate output in the long run

Cost-push inflation corresponds to ________ output and demand-pull inflation corresponds to ________ output.

An economic condition characterized by high unemployment and excessive inflation is called

Since 1970,the Fed generally ________ the interest rate when inflation was ________.

A binding situation occurred during the recession of

In a binding situation,a positive cost shock will cause ________ in output and ________ in the price level.

Refer to the information provided in Figure 13.3 below to answer the questions that follow. Figure 13.3 -Refer to Figure 13.3.Cost-push inflation occurs if

A sudden increase in the price of oil causes a ________ inflation and ________ output.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment,inflation,and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

Other things equal,cost-push inflation results in output and the price level .

If the economy is on the steep portion of the AS curve and taxes decrease, crowds out .

Cost-push inflation corresponds to output and demand-pull inflation corresponds to output.

Since 1970,the Fed generally the interest rate when inflation was .

In a binding situation,a positive cost shock will cause in output and in the price level.

A sudden increase in the price of oil causes a inflation and output.