The key reason that the bursting of the tech-stock bubble of the late 1990s had a mild impact on the macroeconomy is ________. A) rapid intervention by the central bank averted economic catastrophe B) the increase in tech-stock prices was driven by the economic fundamental of technological progress C) the technology sector is a rather […]
Labor supply A) must necessarily increase when the real wage increases. B) increases if the substitution effect exceeds the income effect. C) is increasing and then decreasing in the real wage. D) increases when taxes increase. ANSWER B
The demand for current consumption, as plotted against current income, shifts to the right due to all of the following except A) a decrease in current taxes. B) a decrease in future taxes. C) an increase in current income. D) an increase in future income. ANSWER C
The slope of the Phillips curve in the United States was smallest during which period? A) 1985-2012 B) 1970-1984 C) 1947-1969 D) 1776-1800 ANSWER A
Figure 5.1 provides support for the Fisher effect, by ________. A) displaying a positive relationship between the inflation rate and the nominal interest rate B) showing how developed economies like the U.S. and Japan have less inflation than economies like Turkey and Indonesia C) focusing on short-run fluctuations, rather than long run averages D) plotting […]
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
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 […]
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
The substitution effect measures A) the responses of quantities to changes in the relative prices of goods. B) the responses of relative prices to changes in the demand for goods. C) how two goods can be used for the same purpose. D) the responses of quantities to changes in the relative qualities of goods. […]
Aggregate supply in the new classical aggregate supply a. is vertical in the short-run. b. is horizontal in the short-run. c. is upward sloping in the short-run. d. None of the above ANSWER C
