Question 1

In the text, inflation is given by the equation ________, where   is the current price level and  
 is the future price level.

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 2

One of the main missions of the Federal Reserve is to stabilize the dollar-pound exchange rate.

Accepted Answer

A) True 
 B)False

Question 3

What tool does the U.S. Federal Reserve use to conduct policy? Explain. How does monetary policy impact the macroeconomy?

Accepted Answer

The Fed uses the federal funds rate, whi

Question 4

When a central bank targets interest rates, it adopts a policy to adjust ________ to accommodate ________.

Accepted Answer

A)  money supply; money demand shocks 
B)  money supply; tax changes 
C)  money demand; government debt 
D)  interest rates; money supply 
E)  money demand; money supply shocks 
A)  money supply; money demand shocks 
B)  money supply; tax changes 
C)  money demand; government debt 
D)  interest rates; money supply 
E)  money demand; money supply shocks

Question 5

As lender in the last resort, the Fed loans money to banks at:

Accepted Answer

A)  the federal funds rate. 
B)  the three-month T-bill interest rate. 
C)  the prime interest rate. 
D)  LIBOR. 
E)  the discount rate. 
A)  the federal funds rate. 
B)  the three-month T-bill interest rate. 
C)  the prime interest rate. 
D)  LIBOR. 
E)  the discount rate.

Question 6

Which of the following contributed to high levels of inflation in the 1970s?
i. Oil price shocks
ii. Lower taxes
iii. A productivity slowdown

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii

Question 7

When the Federal Reserve increases the interest rate, the MP curve shifts up and short-term output falls.

Accepted Answer

A) True 
 B)False

Question 8

Oil prices are closely watched because:

Accepted Answer

A)  they hurt automobile owners. 
B)  they affect inflation directly. 
C)  of their impact on stock markets. 
D)  of their immediate impact on subsidies and taxes. 
E)  they affect inflation both directly and indirectly. 
A)  they hurt automobile owners. 
B)  they affect inflation directly. 
C)  of their impact on stock markets. 
D)  of their immediate impact on subsidies and taxes. 
E)  they affect inflation both directly and indirectly.

Question 9

According to the Phillips curve, if the:

Accepted Answer

A)  inflation rate is falling, the economy is booming. 
B)  inflation rate is rising, the economy is in recession. 
C)  inflation rate is rising, the economy is booming. 
D)  unemployment rate is falling, the economy is booming. 
E)  None of these answers is correct. 
A)  inflation rate is falling, the economy is booming. 
B)  inflation rate is rising, the economy is in recession. 
C)  inflation rate is rising, the economy is booming. 
D)  unemployment rate is falling, the economy is booming. 
E)  None of these answers is correct.

Question 10

Consider Figure 12.14 below, which shows the price of oil from January 2005-December 2010. What are the impacts of this on the macroeconomy? In particular, which macroeconomic relationship does this impact? Explain.Figure 12.14: Percent Change Oil Price

Accepted Answer

Oil prices are a form of cost shock, @#IMG-DLM& ,

Question 11

Refer to the following figure when answering the following questions.
Figure 12.2: IS-MP Curve  
-Consider Figure 12.2. If the Fed raises interest rates and there are no aggregate demand shocks, the economy moves from:

Accepted Answer

A)  point b to d 
B)  point b to a 
C)  point b to c 
D)  point c to d 
E)  Not enough information is given. 
A)  point b to d 
B)  point b to a 
C)  point b to c 
D)  point c to d 
E)  Not enough information is given.

Question 12

Economists who study monetary policy believe that it takes anywhere from ________ for monetary policy to have a substantial effect on economic activity.

Accepted Answer

A)  3 to 6 weeks 
B)  6 to 18 days 
C)  6 to 18 months 
D)  3 to 6 months 
E)  6 to 18 weeks 
A)  3 to 6 weeks 
B)  6 to 18 days 
C)  6 to 18 months 
D)  3 to 6 months 
E)  6 to 18 weeks

Question 13

In the Phillips curve,   , if  
Is large, then:

Accepted Answer

A)  price-setting behavior is completely insensitive to short-run fluctuations. 
B)  price-setting behavior is very insensitive to short-run fluctuations. 
C)  inflation is not very sensitive to short-run fluctuations. 
D)  price-setting behavior is very sensitive to short-run fluctuations. 
E)  Not enough information is given. 
A)  price-setting behavior is completely insensitive to short-run fluctuations. 
B)  price-setting behavior is very insensitive to short-run fluctuations. 
C)  inflation is not very sensitive to short-run fluctuations. 
D)  price-setting behavior is very sensitive to short-run fluctuations. 
E)  Not enough information is given.

Question 14

The real interest rate is given by Real interest rate = Nominal interest rate+ Inflation.

Accepted Answer

A) True 
 B)False

Question 15

According to the Phillips curve, if current output is above potential output:

Accepted Answer

A)  inflation falls. 
B)  inflation rises. 
C)  unemployment falls. 
D)  inflation is constant. 
E)  tax rates rise. 
A)  inflation falls. 
B)  inflation rises. 
C)  unemployment falls. 
D)  inflation is constant. 
E)  tax rates rise.

In the text, inflation is given by the equation ________, where is the current price level and is the future price level.

One of the main missions of the Federal Reserve is to stabilize the dollar-pound exchange rate.

What tool does the U.S. Federal Reserve use to conduct policy? Explain. How does monetary policy impact the macroeconomy?

When a central bank targets interest rates, it adopts a policy to adjust to accommodate .

As lender in the last resort, the Fed loans money to banks at:

Which of the following contributed to high levels of inflation in the 1970s? i. Oil price shocks ii. Lower taxes iii. A productivity slowdown

When the Federal Reserve increases the interest rate, the MP curve shifts up and short-term output falls.

Oil prices are closely watched because:

According to the Phillips curve, if the:

Consider Figure 12.14 below, which shows the price of oil from January 2005-December 2010. What are the impacts of this on the macroeconomy? In particular, which macroeconomic relationship does this impact? Explain.Figure 12.14: Percent Change Oil Price

Refer to the following figure when answering the following questions. Figure 12.2: IS-MP Curve -Consider Figure 12.2. If the Fed raises interest rates and there are no aggregate demand shocks, the economy moves from:

Economists who study monetary policy believe that it takes anywhere from ________ for monetary policy to have a substantial effect on economic activity.

In the Phillips curve, , if Is large, then:

The real interest rate is given by Real interest rate = Nominal interest rate+ Inflation.

According to the Phillips curve, if current output is above potential output:

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 12: Monetary Policy and the Phillips Curve

In the text, inflation is given by the equation ________, where is the current price level and is the future price level.

One of the main missions of the Federal Reserve is to stabilize the dollar-pound exchange rate.

What tool does the U.S. Federal Reserve use to conduct policy? Explain. How does monetary policy impact the macroeconomy?

When a central bank targets interest rates, it adopts a policy to adjust ________ to accommodate ________.

As lender in the last resort, the Fed loans money to banks at:

Which of the following contributed to high levels of inflation in the 1970s? i. Oil price shocks ii. Lower taxes iii. A productivity slowdown

When the Federal Reserve increases the interest rate, the MP curve shifts up and short-term output falls.

Oil prices are closely watched because:

According to the Phillips curve, if the:

Consider Figure 12.14 below, which shows the price of oil from January 2005-December 2010. What are the impacts of this on the macroeconomy? In particular, which macroeconomic relationship does this impact? Explain.Figure 12.14: Percent Change Oil Price

Refer to the following figure when answering the following questions. Figure 12.2: IS-MP Curve -Consider Figure 12.2. If the Fed raises interest rates and there are no aggregate demand shocks, the economy moves from:

Economists who study monetary policy believe that it takes anywhere from ________ for monetary policy to have a substantial effect on economic activity.

In the Phillips curve, , if Is large, then:

The real interest rate is given by Real interest rate = Nominal interest rate+ Inflation.

According to the Phillips curve, if current output is above potential output:

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

When a central bank targets interest rates, it adopts a policy to adjust to accommodate .