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
A difference between the new classical and monetarist models is that expectations in the new classical model are _____ while they are _____ in the monetarist model a. forward looking; backward looking. b. rational; adaptive. c. correct; mistaken. d. perfectly competitive; imperfectly competitive. e. both a and b. ANSWER E
Date: September 10th, 2020
According to Figure 5.1, the real interest rate is relatively high in ________. A) Brazil B) Turkey C) Argentina D) Japan E) Indonesia ANSWER A
Date: September 10th, 2020
Any increase in the present value of taxes for the consumer implies A) an increase in lifetime wealth and an increase in current labor supply. B) an increase in lifetime wealth and a decrease in current labor supply. C) a decrease in lifetime wealth and an increase in current labor supply. D) a decrease in […]
Date: September 10th, 2020
According to Keynes, the speculative demand for money pertains to money held in anticipation of a(n) a. increase in bond prices. b. decrease in bond prices. c. rise in interest rates. d. fall in interest rates. e. both b and c ANSWER E
Date: September 10th, 2020
Which of the following is a distinctive feature of a credit-driven asset-price bubble? A) asset-price increases that are “justified” by projections of future value B) a weakening of lending standards C) an increase in the number and variety of market participants D) The affected assets are financial stocks or bonds issued by companies in the […]
Date: September 10th, 2020
Both Keynesians and supply-siders believe that tax cuts a. will increase income by increasing aggregate supply. b. will increase income by increasing aggregate demand. c. will increase income but for different reasons. d. will increase income in the Keynesian model but decrease income in the Supply-side model. ANSWER C
Date: September 10th, 2020
Time inconsistency means A) taking different decisions at different times despite facing the same situation. B) making policy choices that violate the intertemporal budget constraint. C) deciding to do something tomorrow, and then doing something different tomorrow. D) adding a random factor to decisions. ANSWER C
Date: September 10th, 2020
Which statement(s) is (are) consistent with a positive relationship between inflation and the output gap? A) If output rises above its potential level, the unemployment rate falls and firms will raise wages and prices more rapidly. B) In the short run, the AS curve is upward sloping. C) Through Okun’s law, the negative relationship between […]
Date: September 10th, 2020
Assume that people experience a one-time 50 unit increase in their consumption (i.e. the intercept of the consumption function increases by 50). In this case a. equilibrium income will rise by 50 units times the investment multiplier. b. equilibrium income will rise by 50 units. c. equilibrium income will rise by 50 units times the […]
Date: September 10th, 2020
