In the short run ________. A) the more flexible wages and prices are, the more inflation responds to the output gap B) the more sticky wages and prices are, the more difficult to tell the difference between the short run and long run aggregate supply curves C) if wages and prices are sticky, aggregate output […]
Date: September 10th, 2020
A proportionate increase in the price level and the money wage in the classical model a. increase labor supply. b. decrease labor supply. c. leave labor supply unchanged. d. affect labor supply but the direction of the effect is uncertain. ANSWER C
Date: September 10th, 2020
If the output gap is constant at minus 2 and the inflation rate has fallen from 6 percent to 5 percent, then next period’s short-run aggregate supply curve might be ________. A) π = 5 – 0.5 (13 – 15) B) π = 5 + 0.5 (13 – 15) C) π = 4 + 0.5 […]
Date: September 10th, 2020
In the production function, Y = zF(K, Nd), total factor productivity is A) Y/K. B) Y/Nd. C) F/Y. D) z. ANSWER D
Date: September 10th, 2020
If real GDP exceeds potential GDP, this means that a. output is below the level produced at the benchmark rate for high employment and high rate of resource utilization. b. this cannot occur; the economy can never be at a point where real GDP exceeds potential GDP. c. cyclical output is above what the economy […]
Date: September 10th, 2020
During the Great Inflation of the 1970s, (a) the growth rates of M1 and M2 were higher than previously, and (b) the growth rate of M2 was much higher than the growth rate of M1. Explain how the high inflation of the decade relates to each of these facts. ANSWER By the quantity theory […]
Date: September 10th, 2020
According to the Keynesian model of the money market, the supply of money a. depends on the interest rate. b. is chosen by the central bank. c. varies with the price level. d. varies with income. ANSWER B
Date: September 10th, 2020
From the new classical perspective, the disinflation in the early 1980s resulted in a significant recession because a. the policy change to disinflation was unanticipated. b. the policy was not credible. c. inflationary expectations were backward looking. d. None of the above e. both a and b. ANSWER B
Date: September 10th, 2020
Credit-driven bubbles ________. A) occur exclusively within the financial sector B) are more likely to be identified by central bank officials than by market participants C) are best contained with a policy of high real interest rates D) are harder to identify than expectations-driven bubbles ANSWER B
Date: September 10th, 2020
In the event of deflation, or negative inflation, then a. real GDP is always lower than nominal GDP. b. real GDP is always lower than nominal GDP after the base year. c. real GDP is always lower than nominal GDP. d. real GDP is always higher than nominal GDP before the base year. e. None […]
Date: September 10th, 2020
