Deck 20: Parting Thoughts

Question 1

As a country devotes more of its resources to education,we can expect output to stay constant for all time.

Answer 1

False

Question 2

Standards of living in the long run have been improved by higher inflation.

Answer 2

False

Question 3

In the long run,the unemployment rate:

A)is zero.
B)is determined primarily by institutional features of the labor market.
C)is determined primarily by structural features of the labor market.
D)is determined primarily by the business cycle.
E)is indeterminate.

Answer 3

C

Question 4

In the short run,tight monetary policy can:

A)depreciate the domestic currency.
B)adversely affect net exports.
C)exacerbate inflation.
D)promote net exports.
E)a and b

Question 5

In the short run,

A)inflation has inertia.
B)the classical dichotomy does not hold.
C)inflation adjusts instantly.
D)inflation is governed only by money.
E)a and b are correct.

Question 6

The Asian and Argentinean crises have led China:

A)to rely on inflation taxes.
B)to allow its currency to float.
C)to decrease its domestic investment.
D)to maintain strict capital controls.
E)to keep interest rates close to zero.

Question 7

Which of the following has not contributed to higher standards of living in the long run?

A)the stock of technology
B)investment in physical capital
C)investment in human capital
D)stable monetary policy
E)productivity

Question 8

As a country devotes more of its resources to education,we can expect:

A)output to stay constant for all time.
B)output to fall in the short run but rise in the long run.
C)output to rise in the short run but fall in the long run.
D)output to rise in the short and long run.
E)higher rates of inflation.

Question 9

In the long run,the classical dichotomy holds,

A)money is not neutral.
B)there is constant tension between inflation and unemployment.
C)the inflation and unemployment rates are zero.
D)steady-state growth is a constant 2 percent.
E)there is no trade-off between inflation and unemployment.

Question 10

Which of the following is not one of the questions left unanswered at the end of the text?

A)What are the best institutions in a wide range of settings?
B)Why do countries have different investment rates,technologies,and total factor productivity levels?
C)What is the relationship between money and output in the very long run?
D)How can policymakers lock in the credibility gains in monetary policy and the low inflation that have been achieved?
E)How do we measure potential output,and therefore short-run output,in practice?

Question 11

The credibility of the central bank

A)promotes long-run growth.
B)is irrelevant for controlling inflation.
C)is crucial for controlling inflation and stabilizing output.
D)promotes sensible fiscal policy.
E)implies low interest rates.

Question 12

According to the principle of transition dynamics,we should expect China's economy:

A)to grow at a relatively high rate forever.
B)to grow relatively slowly now but speed up over time.
C)to grow relatively fast now but slow down over time.
D)to catch up to the United States in the next 50 years or so.
E)to reach its steady state by the year 2100.

Question 13

In the late 1990s,it was likely that:

A)the GDP gap was almost zero.
B)actual GDP grew more slowly than it had in the previous 20 years.
C)the GDP gap was larger than it had been in the previous 20 years.
D)potential GDP grew faster than it had in the previous 20 years.
E)None of the above is correct.

Question 14

Which of the following has not contributed to higher standards of living in the long run?

A)productivity
B)investment in physical capital
C)investment in human capital
D)the stock of technology
E)lower interest rates

Question 15

Different rates of economic growth across countries reflect:

A)differences in savings rates.
B)differences in initial endowments.
C)the principle of transition dynamics.
D)all of the above
E)none of the above

Question 16

In the long run,real GDP is determined by:

A)low and stable inflation.
B)real forces in the economy such as investment,productivity,and technology.
C)very low rates of unemployment.
D)low tax rates.
E)low oil prices.

Question 17

Standards of living in the long run have been improved by:

A)investment in physical capital.
B)investment in human capital.
C)higher inflation.
D)lower nominal interest rates.
E)a and b

Question 18

In the short run,

A)money is not neutral.
B)there is no trade-off between inflation and unemployment.
C)the inflation and unemployment rates are zero.
D)steady-state growth is a constant 2 percent.
E)there is constant tension between inflation and unemployment.

Question 19

Which of the following has not contributed to higher standards of living in the long run?

A)productivity
B)investment in human capital
C)the stock of technology
D)investment in physical capital
E)none of the above

Question 20

If we cannot accurately measure potential GDP,

A)we might overestimate the severity of a recession.
B)we may adopt the wrong fiscal or monetary policy.
C)we will never know the true state of the economy.
D)All of the above are correct.
E)None of the above is correct.

Question 21

In the long run,the unemployment rate is determined primarily by institutional features of the labor market.

Question 22

If we cannot accurately measure potential GDP,we might overestimate the severity of a recession.

Question 23

Name three contributing factors to standards of living in the long run.

Question 24

The Asian and Argentinean crises led China to maintain strict capital controls.

Question 25

In the late 1990s,it is likely that potential GDP grew faster than it had in the previous 20 years.

Question 26

In the long run,the classical dichotomy holds;there is no trade-off between inflation and unemployment.

Question 27

What problems is economics still trying to answer?

Question 28

In the long run,real GDP is determined by very low rates of unemployment.

Question 29

In the short run,tight monetary policy can exacerbate inflation.

Question 30

The policies used by a successful economy can be adopted by aspiring economies.

Question 31

In the short run,inflation has inertia.