Question 1

Which of the following would not reduce the natural rate of unemployment?

Accepted Answer

A)  a tax cut 
B)  an increase in government expenditures 
C)  wage or price controls 
D)  all of the above 
A)  a tax cut 
B)  an increase in government expenditures 
C)  wage or price controls 
D)  all of the above

Question 2

Real income is redistributed from ________ in the case of ________ deflation.

Accepted Answer

A)  creditors to debtors, anticipated 
B)  creditors to debtors, unanticipated 
C)  debtors to creditors, anticipated 
D)  debtors to creditors, unanticipated 
A)  creditors to debtors, anticipated 
B)  creditors to debtors, unanticipated 
C)  debtors to creditors, anticipated 
D)  debtors to creditors, unanticipated

Question 3

Which of the following is not one of the "unholy trinity" of events that interact to fuel an explosive hyperinflation?

Accepted Answer

A)  supply shocks 
B)  monetary accommodation 
C)  exchange rate appreciation 
D)  frequent wage indexation 
A)  supply shocks 
B)  monetary accommodation 
C)  exchange rate appreciation 
D)  frequent wage indexation

Question 4

The turnover view of unemployment stresses that

Accepted Answer

A)  most job vacancies have skill requirements not possessed by the unemployed. 
B)  many job vacancies are located in different areas of the country than are the unemployed. 
C)  there exist incentives for workers to refuse to accept jobs. 
D)  there exists racial/and or sex discrimination against some workers. 
A)  most job vacancies have skill requirements not possessed by the unemployed. 
B)  many job vacancies are located in different areas of the country than are the unemployed. 
C)  there exist incentives for workers to refuse to accept jobs. 
D)  there exists racial/and or sex discrimination against some workers.

Question 5

The typical cyclically unemployed person includes

Accepted Answer

A)  Andrew, a teenager who has just entered the labor market looking for his first part-time job. 
B)  Barbara, who is re-entering the labor market after a divorce. 
C)  Charles, who was laid off from his factory job but expects to be recalled in a few weeks. 
D)  Diana, who has quit her job and is now looking for another. 
A)  Andrew, a teenager who has just entered the labor market looking for his first part-time job. 
B)  Barbara, who is re-entering the labor market after a divorce. 
C)  Charles, who was laid off from his factory job but expects to be recalled in a few weeks. 
D)  Diana, who has quit her job and is now looking for another.

Question 6

When mismatch unemployment characterizes an economy

Accepted Answer

A)  monetary and fiscal policies to raise AD are the appropriate government action. 
B)  only monetary policy will be effective. 
C)  monetary and fiscal policies to raise AD are not the appropriate government action. 
D)  only general (not specific) fiscal policy will be effective. 
A)  monetary and fiscal policies to raise AD are the appropriate government action. 
B)  only monetary policy will be effective. 
C)  monetary and fiscal policies to raise AD are not the appropriate government action. 
D)  only general (not specific) fiscal policy will be effective.

Question 7

According to Gordon, the main losers due to the redistributive effect of the postwar inflation in the United States were

Accepted Answer

A)  households. 
B)  corporations. 
C)  government. 
D)  foreigners. 
A)  households. 
B)  corporations. 
C)  government. 
D)  foreigners.

Question 8

The U.S. macroeconomic experience of the early to mid-1980s is an example of how

Accepted Answer

A)  reducing inflation comes at the cost of a permanent reduction in real GDP. 
B)  reducing inflation comes at the cost of a temporary reduction in real GDP. 
C)  reducing inflation can be done costless by simply increasing the money growth rate. 
D)  increasing the money growth rate affects inflation alone, and not real GDP. 
A)  reducing inflation comes at the cost of a permanent reduction in real GDP. 
B)  reducing inflation comes at the cost of a temporary reduction in real GDP. 
C)  reducing inflation can be done costless by simply increasing the money growth rate. 
D)  increasing the money growth rate affects inflation alone, and not real GDP.

Question 9

The three sources of government revenue are taxes, the ________ of government bonds, and the ________ of high-powered money.

Accepted Answer

A)  issuance, collection 
B)  issuance, issuance 
C)  buying back, collection 
D)  buying back, issuance 
A)  issuance, collection 
B)  issuance, issuance 
C)  buying back, collection 
D)  buying back, issuance

Question 10

Unemployment compensation, by ________ layoffs at firms whose sales have declined, ________ the natural rate of unemployment.

Accepted Answer

A)  encouraging, raises 
B)  encouraging, lowers 
C)  discouraging, raises 
D)  discouraging, lowers 
A)  encouraging, raises 
B)  encouraging, lowers 
C)  discouraging, raises 
D)  discouraging, lowers

Question 11

When the misery index is used to judge macroeconomic conditions, reducing inflation by one percentage point

Accepted Answer

A)  has no effect at all on how we judge the economy's performance. 
B)  is of less benefit to the economy than reducing the unemployment rate by one percentage point. 
C)  gives the same benefit to the economy as reducing the unemployment rate by one percentage point. 
D)  is of greater benefit to the economy than reducing the unemployment rate by one percentage point. 
A)  has no effect at all on how we judge the economy's performance. 
B)  is of less benefit to the economy than reducing the unemployment rate by one percentage point. 
C)  gives the same benefit to the economy as reducing the unemployment rate by one percentage point. 
D)  is of greater benefit to the economy than reducing the unemployment rate by one percentage point.

Question 12

When the Fisher Effect holds, a one-percentage-point increase in the long-run money growth rate, because it ________ expected inflation, causes ________ in the nominal interest rate in the long run.

Accepted Answer

A)  equally lowers, a one-percentage-point decrease 
B)  does not change, a one-percentage point decrease 
C)  does not change, no change 
D)  equally raises, no change 
E)  equally raises, a one-percentage-point increase 
A)  equally lowers, a one-percentage-point decrease 
B)  does not change, a one-percentage point decrease 
C)  does not change, no change 
D)  equally raises, no change 
E)  equally raises, a one-percentage-point increase

Question 13

The real rate of interest

Accepted Answer

A)  is equal to the nominal rate when Y equals YN. 
B)  is equal to the nominal rate minus the rate of inflation. 
C)  is equal to the nominal rate plus the rate of inflation. 
D)  is never negative. 
A)  is equal to the nominal rate when Y equals YN. 
B)  is equal to the nominal rate minus the rate of inflation. 
C)  is equal to the nominal rate plus the rate of inflation. 
D)  is never negative.

Question 14

A program of complete indexation would

Accepted Answer

A)  eliminate most of the costs of inflation. 
B)  increase the sensitivity of the economy to supply shocks. 
C)  make the role of expectations negligible. 
D)  all of these 
A)  eliminate most of the costs of inflation. 
B)  increase the sensitivity of the economy to supply shocks. 
C)  make the role of expectations negligible. 
D)  all of these

Question 15

What is the "inflation tax"?

Accepted Answer

A)  the difference between nominal and real interest rates received on financial assets, due to inflation 
B)  the fact that our tax system is based on nominal incomes and not real incomes, so that the government collects more taxes due to inflation alone 
C)  the government obtaining goods in exchange for newly created high-powered money that does not add to the real value of private assets due to the resulting inflation 
D)  the fact that greater government spending leaves fewer goods available to the private sector, thus lowering their prices. 
A)  the difference between nominal and real interest rates received on financial assets, due to inflation 
B)  the fact that our tax system is based on nominal incomes and not real incomes, so that the government collects more taxes due to inflation alone 
C)  the government obtaining goods in exchange for newly created high-powered money that does not add to the real value of private assets due to the resulting inflation 
D)  the fact that greater government spending leaves fewer goods available to the private sector, thus lowering their prices.

Question 16

Better public education serves to ________ unemployment.

Accepted Answer

A)  raise mismatch 
B)  lower mismatch 
C)  raise turnover 
D)  lower turnover 
A)  raise mismatch 
B)  lower mismatch 
C)  raise turnover 
D)  lower turnover

Question 17

"Natural unemployment" includes those out of work because of

Accepted Answer

A)  expected or normal turnover which will always characterize a part of the labor force. 
B)  structural unemployment caused by normal technological change in production. 
C)  a recession. 
D)  A and B. 
A)  expected or normal turnover which will always characterize a part of the labor force. 
B)  structural unemployment caused by normal technological change in production. 
C)  a recession. 
D)  A and B.

Question 18

In the United States, the long-run inflation rate can be expressed simply as the growth rate of money

Accepted Answer

A)  plus the long-run growth rate of velocity. 
B)  minus the long-run growth rate of velocity. 
C)  plus the long-run growth rate of real GDP. 
D)  minus the long-run growth rate of real GDP. 
A)  plus the long-run growth rate of velocity. 
B)  minus the long-run growth rate of velocity. 
C)  plus the long-run growth rate of real GDP. 
D)  minus the long-run growth rate of real GDP.

Question 19

Which of the following countries successfully combated hyperinflation only to lapse back in to hyperinflation in 2002?

Accepted Answer

A)  Brazil 
B)  Canada 
C)  Mexico 
D)  Argentina 
A)  Brazil 
B)  Canada 
C)  Mexico 
D)  Argentina

Question 20

The classic loser from an unanticipated inflation is

Accepted Answer

A)  the borrower who pays less nominal interest than expected. 
B)  the borrower who pays more nominal interest than expected. 
C)  the saver who earns less real interest than expected. 
D)  the saver who earns more real interest than expected, and so should have saved more. 
A)  the borrower who pays less nominal interest than expected. 
B)  the borrower who pays more nominal interest than expected. 
C)  the saver who earns less real interest than expected. 
D)  the saver who earns more real interest than expected, and so should have saved more.

Which of the following would not reduce the natural rate of unemployment?

Real income is redistributed from in the case of deflation.

Which of the following is not one of the "unholy trinity" of events that interact to fuel an explosive hyperinflation?

The turnover view of unemployment stresses that

The typical cyclically unemployed person includes

When mismatch unemployment characterizes an economy

According to Gordon, the main losers due to the redistributive effect of the postwar inflation in the United States were

The U.S. macroeconomic experience of the early to mid-1980s is an example of how

The three sources of government revenue are taxes, the of government bonds, and the of high-powered money.

Unemployment compensation, by layoffs at firms whose sales have declined, the natural rate of unemployment.

When the misery index is used to judge macroeconomic conditions, reducing inflation by one percentage point

When the Fisher Effect holds, a one-percentage-point increase in the long-run money growth rate, because it expected inflation, causes in the nominal interest rate in the long run.

The real rate of interest

A program of complete indexation would

What is the "inflation tax"?

Better public education serves to ________ unemployment.

"Natural unemployment" includes those out of work because of

In the United States, the long-run inflation rate can be expressed simply as the growth rate of money

Which of the following countries successfully combated hyperinflation only to lapse back in to hyperinflation in 2002?

The classic loser from an unanticipated inflation is

What Is Macroeconomics

The Measurement of Income, Prices, and Unemployment

Spending, Income, and Interest Rates

Monetary and Fiscal Policy in the Is-Lm Model

The Government Budget, Foreign Borrowing, and the Twin Deficits

International Trade, Exchange Rates, and Macroeconomic Policy

Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy

Inflation: Its Causes and Cures

The Theory of Economic Growth

The Big Questions of Economic Growth

The Government Budget, the Public Debt, and Social Security

Money and Financial Markets

Stabilization Policy in the Closed and Open Economy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro Confronts New Keynesian Macro

Conclusion: Where We Stand

Filters

Exam 9: The Goals of Stabilization Policy: Low Inflation and Low Unemployment

Which of the following would not reduce the natural rate of unemployment?

Real income is redistributed from ________ in the case of ________ deflation.

Which of the following is not one of the "unholy trinity" of events that interact to fuel an explosive hyperinflation?

The turnover view of unemployment stresses that

The typical cyclically unemployed person includes

When mismatch unemployment characterizes an economy

According to Gordon, the main losers due to the redistributive effect of the postwar inflation in the United States were

The U.S. macroeconomic experience of the early to mid-1980s is an example of how

The three sources of government revenue are taxes, the ________ of government bonds, and the ________ of high-powered money.

Unemployment compensation, by ________ layoffs at firms whose sales have declined, ________ the natural rate of unemployment.

When the misery index is used to judge macroeconomic conditions, reducing inflation by one percentage point

When the Fisher Effect holds, a one-percentage-point increase in the long-run money growth rate, because it ________ expected inflation, causes ________ in the nominal interest rate in the long run.

The real rate of interest

A program of complete indexation would

What is the "inflation tax"?

Better public education serves to ________ unemployment.

"Natural unemployment" includes those out of work because of

In the United States, the long-run inflation rate can be expressed simply as the growth rate of money

Which of the following countries successfully combated hyperinflation only to lapse back in to hyperinflation in 2002?

The classic loser from an unanticipated inflation is

What Is Macroeconomics

The Measurement of Income, Prices, and Unemployment

Spending, Income, and Interest Rates

Monetary and Fiscal Policy in the Is-Lm Model

The Government Budget, Foreign Borrowing, and the Twin Deficits

International Trade, Exchange Rates, and Macroeconomic Policy

Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy

Inflation: Its Causes and Cures

The Theory of Economic Growth

The Big Questions of Economic Growth

The Government Budget, the Public Debt, and Social Security

Money and Financial Markets

Stabilization Policy in the Closed and Open Economy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro Confronts New Keynesian Macro

Conclusion: Where We Stand

Filters

Real income is redistributed from in the case of deflation.

The three sources of government revenue are taxes, the of government bonds, and the of high-powered money.

Unemployment compensation, by layoffs at firms whose sales have declined, the natural rate of unemployment.

When the Fisher Effect holds, a one-percentage-point increase in the long-run money growth rate, because it expected inflation, causes in the nominal interest rate in the long run.