Question 1

Figure 8-6  
-In the figure above, an expansionary monetary policy with no change in inflationary expectations takes us along path

Accepted Answer

A)  A. 
B)  H. 
C)  G. 
D)  F. 
E)  B. 
A)  A. 
B)  H. 
C)  G. 
D)  F. 
E)  B.

Question 2

The effect of a supply shock on inflation and real GDP

Accepted Answer

A)  depends on the initial expected rate of inflation. 
B)  depends on the response in the growth of nominal GDP. 
C)  depends on the level of natural real GDP. 
D)  both A and B are correct 
A)  depends on the initial expected rate of inflation. 
B)  depends on the response in the growth of nominal GDP. 
C)  depends on the level of natural real GDP. 
D)  both A and B are correct

Question 3

A rise in expected inflation causes

Accepted Answer

A)  the SP curve to shift upward. 
B)  the SP curve to shift downward. 
C)  a movement upward along the SP curve. 
D)  a movement downward along the SP curve. 
A)  the SP curve to shift upward. 
B)  the SP curve to shift downward. 
C)  a movement upward along the SP curve. 
D)  a movement downward along the SP curve.

Question 4

Assuming adaptive expectations, a "cold turkey" reduction in AD by policymakers will initially reduce

Accepted Answer

A)  output but not inflation. 
B)  inflation but not output. 
C)  output less than inflation. 
D)  both output and inflation. 
A)  output but not inflation. 
B)  inflation but not output. 
C)  output less than inflation. 
D)  both output and inflation.

Question 5

If people completely adjust for any error in their estimation of this period's inflation rate

Accepted Answer

A)  the expected rate of inflation must be higher next period. 
B)  the expected rate of inflation must be lower next period. 
C)  the actual rate of inflation will be higher next period. 
D)  next period's expected inflation will be the same as this period's actual inflation. 
A)  the expected rate of inflation must be higher next period. 
B)  the expected rate of inflation must be lower next period. 
C)  the actual rate of inflation will be higher next period. 
D)  next period's expected inflation will be the same as this period's actual inflation.

Question 6

Supply shocks in the 1990s

Accepted Answer

A)  reduced the natural rate of unemployment. 
B)  helped hold down inflation. 
C)  had the opposite effect on the economy from the supply shocks of the 1970s. 
D)  All of the above. 
A)  reduced the natural rate of unemployment. 
B)  helped hold down inflation. 
C)  had the opposite effect on the economy from the supply shocks of the 1970s. 
D)  All of the above.

Question 7

If the inflation rate is 10% and nominal GDP growth is 8% then real GDP must have

Accepted Answer

A)  increased by 2%. 
B)  decreased by 18%. 
C)  decreased by 2%. 
D)  increased by 18%. 
A)  increased by 2%. 
B)  decreased by 18%. 
C)  decreased by 2%. 
D)  increased by 18%.

Question 8

A policy response to a beneficial supply shock which focuses the full impact of the shock to lower the inflation rate is

Accepted Answer

A)  a neutral policy. 
B)  an extinguishing policy. 
C)  an accommodating policy. 
D)  an aggravating policy. 
A)  a neutral policy. 
B)  an extinguishing policy. 
C)  an accommodating policy. 
D)  an aggravating policy.

Question 9

The variable p(e) represents

Accepted Answer

A)  the inflation rate that workers expect during the current period. 
B)  the price level that workers believe will exist during the next year. 
C)  the inflation rate that both workers and firms expected at the time of the last contract negotiation. 
D)  the difference between the inflation rate expected this year and the actual rate of inflation. 
A)  the inflation rate that workers expect during the current period. 
B)  the price level that workers believe will exist during the next year. 
C)  the inflation rate that both workers and firms expected at the time of the last contract negotiation. 
D)  the difference between the inflation rate expected this year and the actual rate of inflation.

Figure 8-6 -In the figure above, an expansionary monetary policy with no change in inflationary expectations takes us along path

The effect of a supply shock on inflation and real GDP

A rise in expected inflation causes

Assuming adaptive expectations, a "cold turkey" reduction in AD by policymakers will initially reduce

If people completely adjust for any error in their estimation of this period's inflation rate

Supply shocks in the 1990s

If the inflation rate is 10% and nominal GDP growth is 8% then real GDP must have

A policy response to a beneficial supply shock which focuses the full impact of the shock to lower the inflation rate is

The variable p(e) represents

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

The Goals of Stabilization Policy: Low Inflation and Low Unemployment

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

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Exam 8: Inflation: Its Causes and Cures

Figure 8-6 -In the figure above, an expansionary monetary policy with no change in inflationary expectations takes us along path

The effect of a supply shock on inflation and real GDP

A rise in expected inflation causes

Assuming adaptive expectations, a "cold turkey" reduction in AD by policymakers will initially reduce

If people completely adjust for any error in their estimation of this period's inflation rate

Supply shocks in the 1990s

If the inflation rate is 10% and nominal GDP growth is 8% then real GDP must have

A policy response to a beneficial supply shock which focuses the full impact of the shock to lower the inflation rate is

The variable p(e) represents

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

The Goals of Stabilization Policy: Low Inflation and Low Unemployment

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