Exam 17: Stabilization in an Integrated World Economy

What kinds of unemployment are associated with the natural rate of unemployment?

According to the hypothesis of New Keynesian inflation dynamics,an increase in aggregate demand brings about

-Refer to the above figure.Suppose the economy is at point B and the central bank adopts expansionary monetary policy.In the short run,this will result in

A reduction in world oil supplies is likely to cause

When the economy is at its natural rate of unemployment,

Suppose the economy is in equilibrium when there is a change in environmental policy that bans all pesticides and herbicides on farmland.We would expect to observe

Economists who favor policy activism argue that the United States economy is NOT always in equilibrium because

-In the above figure,if we start at and ,and the money supply increases unexpectedly,what would be the short-run equilibrium even with rational expectations?

In the short run,unanticipated inflation typically leads to

With discretionary policy making,fiscal and monetary policies are usually

The longer is the interval between firms' price adjustments,

According to the rational expectations hypothesis,monetary policy can have real effects on such variables as real Gross Domestic Product (GDP)in the short run

During a recession,the

Which of the following can help explain why prices might be "sticky"?

The menu cost theory states that

Under the assumption of rational expectations,expectations people have formed are an important determinant of

According to New Keynesians,which of the following is one of the two key factors that determines the inflation rate?

In new Keynesian theory,the pattern of inflation exhibited by an economy with growing aggregate demand known as inflation dynamics is

Explain the rational expectations hypothesis.

Structural unemployment is likely to be affected by