Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD1.A recession is likely if the economy operates under __________ assumptions,which include wage and price __________.

A) new classical;flexibility B) new classical;inflexibilities C) new Keynesian;flexibility D) new Keynesian;inflexibilities A) new classical;flexibility B) new classical;inflexibilities C) new Keynesian;flexibility D) new Keynesian;inflexibilities

Exhibit 16-4 -Refer to Exhibit 16-4.If LRAS1 shifts to LRAS2,and this causes AD1 to shift to AD2,economists would call this a

A) rational expectations cycle. B) policy ineffectiveness proposition. C) short run Phillips curve. D) real business cycle. A) rational expectations cycle. B) policy ineffectiveness proposition. C) short run Phillips curve. D) real business cycle.

A) is highly unlikely if the Phillips curve is downward sloping. B) implies that a tradeoff between inflation and unemployment may not always exist. C) is the simultaneous occurrence of high rates of inflation and unemployment. D) b and c E) a,b,and c A) is highly unlikely if the Phillips curve is downward sloping. B) implies that a tradeoff between inflation and unemployment may not always exist. C) is the simultaneous occurrence of high rates of inflation and unemployment. D) b and c E) a,b,and c

Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD1.If policy is correctly anticipated and people hold rational expectations,according to new classical theory the economy in the short run will

A) move to A. B) stay at B. C) move to F. D) move to E. A) move to A. B) stay at B. C) move to F. D) move to E.

Exam 16: Expectations Theory and the Economy

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Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD₁.A recession is likely if the economy operates under assumptions,which include wage and price .

(Multiple Choice)

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Question 121

The Friedman natural rate theory states that

(Multiple Choice)

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Question 122

As incorrectly low inflation expectations catch up with the higher actual inflation rate,the SRAS curve shifts and the short-run Phillips curve shifts .

(Multiple Choice)

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Question 123

Exhibit 16-4 -Refer to Exhibit 16-4.If LRAS₁ shifts to LRAS₂,and this causes AD₁ to shift to AD₂,economists would call this a

(Multiple Choice)

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Question 124

According to new classical theory,if policy is correctly anticipated,expectations are formed rationally,and wages and prices are fully flexible,then an increase in aggregate demand will change Real GDP,but not the price level.

(True/False)

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Question 125

Exhibit 16-11 -Refer to Exhibit 16-11.Assume that the starting point is point 1.Suppose that there is a supply-side change capable of reducing the capacity of the economy to produce.Which of the following best goes with the diagram shown?

(Multiple Choice)

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Question 126

Exhibit 16-8 -Refer to Exhibit 16-8.Assume that the starting point is point 1.Suppose that the Fed implements expansionary monetary policy that raises aggregate demand.Which of the following best goes with the diagram shown?

(Multiple Choice)

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Question 127

The main difference between new classical and new Keynesian theory is with respect to the assumption of

(Multiple Choice)

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Question 128

The Friedman natural rate theory is built upon

(Multiple Choice)

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Question 129

If stagflation is present the short-run Phillips curve is vertical.

(True/False)

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Question 130

New Keynesian theorists argue that

(Multiple Choice)

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Question 131

Which of the following changes would not be considered a likely source of changes in Real GDP according to real business cycle theory?

(Multiple Choice)

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Question 132

Stagflation

(Multiple Choice)

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Question 133

According to Friedman,in which of the following situations is the economy in long-run equilibrium?

(Multiple Choice)

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Question 134

Exhibit 16-10 -Refer to Exhibit 16-10.Assume that the starting point is point 1.Suppose that the government implements expansionary fiscal policy that raises aggregate demand.Which of the following best goes with the diagram shown?

(Multiple Choice)

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Question 135

The Friedman natural rate theory implies that there is a tradeoff between inflation and unemployment in

(Multiple Choice)

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Question 136

Milton Friedman argued that there is a

(Multiple Choice)

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Question 137

If there is a stable downward-sloping Phillips curve,it follows that an economy can choose the combination of

(Multiple Choice)

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Question 138

Exhibit 16-3 -Refer to Exhibit 16-3.The economy is at point A.According to the Friedman natural rate theory,in the long run after a rise in the money supply,the economy will be at point

(Multiple Choice)

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Question 139

Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD₁.If policy is correctly anticipated and people hold rational expectations,according to new classical theory the economy in the short run will

(Multiple Choice)

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Question 140

Showing 121 - 140 of 146

Exam 16: Expectations Theory and the Economy

Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD1.A recession is likely if the economy operates under __________ assumptions,which include wage and price __________.

The Friedman natural rate theory states that

As incorrectly low inflation expectations catch up with the higher actual inflation rate,the SRAS curve shifts __________ and the short-run Phillips curve shifts __________.

Exhibit 16-4 -Refer to Exhibit 16-4.If LRAS1 shifts to LRAS2,and this causes AD1 to shift to AD2,economists would call this a

According to new classical theory,if policy is correctly anticipated,expectations are formed rationally,and wages and prices are fully flexible,then an increase in aggregate demand will change Real GDP,but not the price level.

Exhibit 16-11 -Refer to Exhibit 16-11.Assume that the starting point is point 1.Suppose that there is a supply-side change capable of reducing the capacity of the economy to produce.Which of the following best goes with the diagram shown?

Exhibit 16-8 -Refer to Exhibit 16-8.Assume that the starting point is point 1.Suppose that the Fed implements expansionary monetary policy that raises aggregate demand.Which of the following best goes with the diagram shown?

The main difference between new classical and new Keynesian theory is with respect to the assumption of

The Friedman natural rate theory is built upon

If stagflation is present the short-run Phillips curve is vertical.

New Keynesian theorists argue that

Which of the following changes would not be considered a likely source of changes in Real GDP according to real business cycle theory?

Stagflation

According to Friedman,in which of the following situations is the economy in long-run equilibrium?

Exhibit 16-10 -Refer to Exhibit 16-10.Assume that the starting point is point 1.Suppose that the government implements expansionary fiscal policy that raises aggregate demand.Which of the following best goes with the diagram shown?

The Friedman natural rate theory implies that there is a tradeoff between inflation and unemployment in

Milton Friedman argued that there is a

If there is a stable downward-sloping Phillips curve,it follows that an economy can choose the combination of

Exhibit 16-3 -Refer to Exhibit 16-3.The economy is at point A.According to the Friedman natural rate theory,in the long run after a rise in the money supply,the economy will be at point

Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD1.If policy is correctly anticipated and people hold rational expectations,according to new classical theory the economy in the short run will

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Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD₁.A recession is likely if the economy operates under assumptions,which include wage and price .

As incorrectly low inflation expectations catch up with the higher actual inflation rate,the SRAS curve shifts and the short-run Phillips curve shifts .

Exhibit 16-4 -Refer to Exhibit 16-4.If LRAS₁ shifts to LRAS₂,and this causes AD₁ to shift to AD₂,economists would call this a

Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD₁.If policy is correctly anticipated and people hold rational expectations,according to new classical theory the economy in the short run will