Use the following to answer questions : Equation: Monetary Policy Rule iS1U1B1tS1U1B0 = $\pi$S1U1B1tS1U1B0 + $\rho$+ $\theta$ S1U1B1 $\pi$S1U1B0 ( $\pi$S1U1B1tS1U1B0 - $\pi$*S1U1B1tS1U1B0) + $\theta$ S1U1B1YS1U1B0(YS1U1B1tS1U1B0 - $\bar { Y } _ { t }$ ) -(Equation: Monetary Policy Rule) Given the monetary policy rule of the dynamic model of aggregate demand and aggregate supply, if the inflation rate increases by 1 percentage point, by how much does the nominal interest increase:

A) 1 B) 1 + $\rho$ C) 1 + $\theta$ $\pi$ D) $1 + \theta _ { \pi } \left( 1 - \pi _ { \mathrm { t } } { } ^ { * } \right)$ A) 1 B) 1 + $\rho$ C) 1 + $\theta$ $\pi$ D) $1 + \theta _ { \pi } \left( 1 - \pi _ { \mathrm { t } } { } ^ { * } \right)$

Exam 15: A Dynamic Model of Economic Fluctuations

According to the Fisher equation, the real interest, r_t, equals the nominal interest rate, i_t, minus the expected inflation rate, which is written as:

(Multiple Choice)

4.8/5

(33)

Question 21

A central bank that chooses a small value of $\theta$ _$\pi$ , the responsiveness of nominal interest rates to inflation, and a large value of $\theta$ _Y, the responsiveness of nominal interest rates to output, is choosing to obtain less _ at the expense of more _.

(Multiple Choice)

4.8/5

(32)

Question 22

The dynamic model of aggregate demand and aggregate supply assumes that people form expectations of inflation based on:

(Multiple Choice)

4.8/5

(37)

Question 23

In the dynamic model, the supply shock variable, $\nu$ _t, is a variable appearing in which of the following equations of the model?

(Multiple Choice)

4.8/5

(39)

Question 24

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the nominal interest rate, i_t, equals all of the following except:

(Multiple Choice)

4.8/5

(33)

Question 25

According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:

(Multiple Choice)

4.9/5

(36)

Question 26

According to the Taylor rule, when real GDP is below its natural level, the nominal federal funds rate should be _, and when inflation exceeds 2 percent, the nominal federal funds rate should be _.

(Multiple Choice)

4.9/5

(32)

Question 27

Use the following to answer questions : Equation: Monetary Policy Rule i_t = $\pi$ _t + $\rho$ + $\theta$ _$\pi$ ( $\pi$ _t - $\pi$ *_t) + $\theta$ _Y(Y_t - $\bar { Y } _ { t }$ ) -(Equation: Monetary Policy Rule) Given the monetary policy rule of the dynamic model of aggregate demand and aggregate supply, if the inflation rate increases by 1 percentage point, by how much does the nominal interest increase:

(Multiple Choice)

4.9/5

(29)

Question 28

Increases in the natural level of output allow the economy to produce _ goods and services and make people want to buy _ goods and services.

(Multiple Choice)

4.9/5

(29)

Question 29

Expectations of inflation based on recently observed inflation is called the assumption of _____ expectations.

(Multiple Choice)

4.8/5

(38)

Question 30

The dynamic aggregate supply curve illustrates a short-run _ relationship between output and _.

(Multiple Choice)

4.9/5

(35)

Question 31

In the dynamic model, changes in fiscal policy are captured in changes in the:

(Multiple Choice)

4.9/5

(22)

Question 32

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?

(Multiple Choice)

4.8/5

(39)

Question 33

According to the Phillips curve, firms _ prices when output is below the natural level of output, or equivalently, when the unemployment rate is _ the natural rate of unemployment.

(Multiple Choice)

4.7/5

(37)

Question 34

The dynamic aggregate demand curve is drawn for a given:

(Multiple Choice)

5.0/5

(28)

Question 35

The dynamic aggregate supply curve will shift if any of the following changes except the:

(Multiple Choice)

4.8/5

(33)

Question 36

Use the model of dynamic aggregate demand and aggregate supply to graphically illustrate the impact of a permanent increase in the central bank's inflation target when the economy is initially at long-run equilibrium. Explain the time path of output and inflation in words.

(Essay)

4.7/5

(29)

Question 37

Which of the following would be represented by a positive value of the random supply shock, $\nu$ _t?

(Multiple Choice)

4.9/5

(33)

Question 38

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the demand and supply shocks, $\varepsilon$ _t and $\nu$ _t, equal _____ and current inflation, $\pi$ _t, equals _____.

(Multiple Choice)

4.8/5

(31)

Question 39

How does the DAS curve reflect the Phillips curve? Explain.

(Essay)

4.9/5

(39)

Question 40

Showing 21 - 40 of 110

According to the Fisher equation, the real interest, r_t, equals the nominal interest rate, i_t, minus the expected inflation rate, which is written as:

A central bank that chooses a small value of $\theta$ _$\pi$ , the responsiveness of nominal interest rates to inflation, and a large value of $\theta$ _Y, the responsiveness of nominal interest rates to output, is choosing to obtain less _ at the expense of more _.

The dynamic model of aggregate demand and aggregate supply assumes that people form expectations of inflation based on:

In the dynamic model, the supply shock variable, $\nu$ _t, is a variable appearing in which of the following equations of the model?

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the nominal interest rate, i_t, equals all of the following except:

According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:

According to the Taylor rule, when real GDP is below its natural level, the nominal federal funds rate should be _, and when inflation exceeds 2 percent, the nominal federal funds rate should be _.

Increases in the natural level of output allow the economy to produce _ goods and services and make people want to buy _ goods and services.

Expectations of inflation based on recently observed inflation is called the assumption of _____ expectations.

The dynamic aggregate supply curve illustrates a short-run _ relationship between output and _.

In the dynamic model, changes in fiscal policy are captured in changes in the:

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?

According to the Phillips curve, firms _ prices when output is below the natural level of output, or equivalently, when the unemployment rate is _ the natural rate of unemployment.

The dynamic aggregate demand curve is drawn for a given:

The dynamic aggregate supply curve will shift if any of the following changes except the:

Use the model of dynamic aggregate demand and aggregate supply to graphically illustrate the impact of a permanent increase in the central bank's inflation target when the economy is initially at long-run equilibrium. Explain the time path of output and inflation in words.

Which of the following would be represented by a positive value of the random supply shock, $\nu$ _t?

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the demand and supply shocks, $\varepsilon$ _t and $\nu$ _t, equal _____ and current inflation, $\pi$ _t, equals _____.

How does the DAS curve reflect the Phillips curve? Explain.

The Science of Macroeconomics

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labor Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand Ii: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

Understanding Consumer Behavior

The Theory of Investment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

Filters

Exam 15: A Dynamic Model of Economic Fluctuations

According to the Fisher equation, the real interest, rt, equals the nominal interest rate, it, minus the expected inflation rate, which is written as:

A central bank that chooses a small value of θ\thetaθ π\piπ , the responsiveness of nominal interest rates to inflation, and a large value of θ\thetaθ Y, the responsiveness of nominal interest rates to output, is choosing to obtain less _____ at the expense of more _____.

The dynamic model of aggregate demand and aggregate supply assumes that people form expectations of inflation based on:

In the dynamic model, the supply shock variable, ν\nuν t, is a variable appearing in which of the following equations of the model?

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the nominal interest rate, it, equals all of the following except:

According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:

According to the Taylor rule, when real GDP is below its natural level, the nominal federal funds rate should be _____, and when inflation exceeds 2 percent, the nominal federal funds rate should be _____.

Increases in the natural level of output allow the economy to produce _____ goods and services and make people want to buy _____ goods and services.

Expectations of inflation based on recently observed inflation is called the assumption of _____ expectations.

The dynamic aggregate supply curve illustrates a short-run _____ relationship between output and _____.

In the dynamic model, changes in fiscal policy are captured in changes in the:

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?

According to the Phillips curve, firms _____ prices when output is below the natural level of output, or equivalently, when the unemployment rate is _____ the natural rate of unemployment.

The dynamic aggregate demand curve is drawn for a given:

The dynamic aggregate supply curve will shift if any of the following changes except the:

Use the model of dynamic aggregate demand and aggregate supply to graphically illustrate the impact of a permanent increase in the central bank's inflation target when the economy is initially at long-run equilibrium. Explain the time path of output and inflation in words.

Which of the following would be represented by a positive value of the random supply shock, ν\nuν t?

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the demand and supply shocks, ε\varepsilonε t and ν\nuν t, equal _____ and current inflation, π\piπ t, equals _____.

How does the DAS curve reflect the Phillips curve? Explain.

The Science of Macroeconomics

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labor Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand Ii: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

Understanding Consumer Behavior

The Theory of Investment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

Filters

According to the Fisher equation, the real interest, r_t, equals the nominal interest rate, i_t, minus the expected inflation rate, which is written as:

A central bank that chooses a small value of $\theta$ _$\pi$ , the responsiveness of nominal interest rates to inflation, and a large value of $\theta$ _Y, the responsiveness of nominal interest rates to output, is choosing to obtain less _ at the expense of more _.

In the dynamic model, the supply shock variable, $\nu$ _t, is a variable appearing in which of the following equations of the model?

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the nominal interest rate, i_t, equals all of the following except:

According to the Taylor rule, when real GDP is below its natural level, the nominal federal funds rate should be _, and when inflation exceeds 2 percent, the nominal federal funds rate should be _.

Increases in the natural level of output allow the economy to produce _ goods and services and make people want to buy _ goods and services.

The dynamic aggregate supply curve illustrates a short-run _ relationship between output and _.

According to the Phillips curve, firms _ prices when output is below the natural level of output, or equivalently, when the unemployment rate is _ the natural rate of unemployment.

Which of the following would be represented by a positive value of the random supply shock, $\nu$ _t?

At long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, the demand and supply shocks, $\varepsilon$ _t and $\nu$ _t, equal _____ and current inflation, $\pi$ _t, equals _____.