Exam 13: Macroeconomic Policy and Aggregate Demand and Supply Analysis

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

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(Multiple Choice)

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Question 1

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What do the legislative and implementation lags have in common?

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(Multiple Choice)

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Question 2

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How do the hierarchical and dual mandates differ in terms of macroeconomic consequences?

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(Essay)

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Question 3

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A dual mandate implies more tolerance of inflation than a hierarchical mandate.Ceteris paribus,the creation and purchasing power of wealth receive more support from a hierarchical mandate.A dual mandate implies less tolerance of positive output gaps and more support for aggregate demand.

A negative shock in aggregate demand will likely result in no permanent change in ________.

(Multiple Choice)

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Question 4

An activist policy to promote high employment ________.

(Multiple Choice)

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Question 5

According to the Taylor rule,which of the following will lead to a higher nominal federal funds rate?

(Multiple Choice)

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Question 6

The equilibrium real interest rate is the rate ________.

(Multiple Choice)

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Question 7

A goal of very high employment may lead to ________.

(Multiple Choice)

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Question 8

A good reason for policy makers to pursue a goal of stabilizing economic activity is that ________.

(Multiple Choice)

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Question 9

An increase in financial frictions results in ________.

(Multiple Choice)

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Question 10

The goal of maximum sustainable employment is roughly equivalent to achieving ________.

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Question 11

Some central banks pursue price stability before they pursue other goals.Which of the following central banks have this kind of hierarchical mandate? i.Bank of England Ii.Bank of Canada Iii.European Central Bank Iv.Federal Reserve (U.S.A. )

(Multiple Choice)

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Question 12

Is the Taylor rule compatible with a hierarchical mandate?

(Essay)

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Question 13

Cost-push inflation is to as demand-pull inflation is to .

(Multiple Choice)

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Question 14

If most shocks to the economy are shocks,then .

(Multiple Choice)

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Question 15

Figure 13.1 -If the economy is at point 1 in Figure 13.1 and the central bank issues a credible statement that it can and will cause inflation to rise,what happens next?

(Multiple Choice)

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Question 16

Figure 13.1 -Suppose the economy is at point 1 in Figure 13.1.With output below potential output,it might not be possible to create any expectation of an increase in inflation.How,then,might output be brought back to potential? What would this look like on the graph?

(Essay)

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Question 17

If the inflation rate target is 2%,the current inflation rate is 3%,and the output gap is 2%,then according to the Taylor rule,the nominal federal funds rate should be ________ percent.

(Multiple Choice)

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Question 18

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

(Multiple Choice)

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Question 19

A change in the equilibrium real interest rate may result from ________.

(Multiple Choice)

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Question 20

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Exam 13: Macroeconomic Policy and Aggregate Demand and Supply Analysis

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

What do the legislative and implementation lags have in common?

How do the hierarchical and dual mandates differ in terms of macroeconomic consequences?

A negative shock in aggregate demand will likely result in no permanent change in ________.

An activist policy to promote high employment ________.

According to the Taylor rule,which of the following will lead to a higher nominal federal funds rate?

The equilibrium real interest rate is the rate ________.

A goal of very high employment may lead to ________.

A good reason for policy makers to pursue a goal of stabilizing economic activity is that ________.

An increase in financial frictions results in ________.

The goal of maximum sustainable employment is roughly equivalent to achieving ________.

Some central banks pursue price stability before they pursue other goals.Which of the following central banks have this kind of hierarchical mandate? i.Bank of England Ii.Bank of Canada Iii.European Central Bank Iv.Federal Reserve (U.S.A. )

Is the Taylor rule compatible with a hierarchical mandate?

Cost-push inflation is to ________ as demand-pull inflation is to ________.

If most shocks to the economy are ________ shocks,then ________.

Figure 13.1 -If the economy is at point 1 in Figure 13.1 and the central bank issues a credible statement that it can and will cause inflation to rise,what happens next?

Figure 13.1 -Suppose the economy is at point 1 in Figure 13.1.With output below potential output,it might not be possible to create any expectation of an increase in inflation.How,then,might output be brought back to potential? What would this look like on the graph?

If the inflation rate target is 2%,the current inflation rate is 3%,and the output gap is 2%,then according to the Taylor rule,the nominal federal funds rate should be ________ percent.

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

A change in the equilibrium real interest rate may result from ________.

The Policy and Practice of Macroeconomics

Measuring Macroeconomic Data

Aggregate Production and Productivity

Saving and Investment in Closed and Open Economies

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

Aggregate Supply and the Phillips Curve

The Aggregate Demand and Supply Model

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

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Cost-push inflation is to as demand-pull inflation is to .

If most shocks to the economy are shocks,then .