Exam 17: Stabilization in an Integrated World Economy

The idea that anticipated monetary policy cannot affect real variables such as real Gross Domestic Product (GDP)or employment is known as

Costs of renewing contracts or printing new price lists are known as

Which of the following unemployment rates can be negative?

According to the policy irrelevance proposition,

From the late 1980s to 2000,the natural rate of unemployment

When the economy is in long-run equilibrium,there will be

The hypothesis that people combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes is the basis of the

Describe and explain the real business cycle theory.

On average,the greater the unexpected decline in aggregate demand,

Assume that the government decides to use fiscal or monetary policy to stimulate the economy and that this action comes as a surprise to most individuals and businesses.In the short run,the result will be

According to New Keynesians,an increase in which of the following will tend to cause the inflation rate to increase?

In the above figure,if we start at and ,and the money supply increases unexpectedly,what causes the economy to get to the long-run equilibrium?

-Refer to the above figure.The rational expectations hypothesis implies that an anticipated decrease in aggregate demand from to will

An unexpected decrease in aggregate demand

The rational expectations hypothesis states that

The most important new Keynesian assumption that distinguishes this theory differs from the real-business-cycle theory is the new Keynesian assumption

Which of the following scenarios can be classified as passive policy making?

The natural rate of unemployment is defined as the rate of unemployment that

When it comes to active policy making most economists agree that

Proponents of the policy irrelevance proposition believe that,under the assumption of rational expectations,the unemployment rate will