According to the accelerationist Phillips curve, ________. A) expectations adjust continually to the latest information B) increases in inflation cause the unemployment gap to widen C) inflation will change so long as an unemployment gap persists D) all of the above E) none of the above ANSWER C
Date: September 10th, 2020
The time constraint for the consumer is A) the amount of time for decision making. B) expressed as leisure time – time spent working = total time available. C) expressed as leisure time – sleep time = time spent working. D) expressed as leisure time + time spent working = total time available. ANSWER […]
Date: September 10th, 2020
In the two-period model, the nature of the asymmetric information is that A) only the bank knows who the bad borrowers are. B) only borrowers know whether they are bad or not. C) only borrowers know the value of their collateral. D) only banks can value the collateral. ANSWER B
Date: September 10th, 2020
In the two-period model with asymmetric information, the presence of bad borrowers who always default A) makes good borrowers better off. B) matters only for the loan interest rate faced by bad borrowers. C) affects the equilibrium profits of banks. D) affects good borrowers adversely. ANSWER D
Date: September 10th, 2020
If the Friedman rule for long-term monetary policy were implemented, the result would be A) inflation. B) neither inflation nor deflation. C) deflation. D) hyperinflation. ANSWER C
Date: September 10th, 2020
An economy without monetary exchange is called A) a primitive economy. B) a barter economy. C) a socialist economy. D) an autarky economy. ANSWER B
Date: September 10th, 2020
What are the effects of a financial crisis on short-run aggregate supply? How might long-run aggregate supply be affected? What will be an ideal response? ANSWER A financial crisis affects short-run aggregate supply by first affecting aggregate demand. The decline in economic activity that results from disruption of credit markets causes output to fall […]
Date: September 10th, 2020
How is a financial crisis like a power blackout? What will be an ideal response? ANSWER A blackout occurs when a breakdown at one or more points in the power grid causes strain at other points. As these fail, the entire system can collapse. The failure of a single financial institution disrupts the functioning […]
Date: September 10th, 2020
If the proportion of bad borrowers increases, A) the lending interest rate increases. B) the lending interest rate decreases. C) the borrowing interest rate increases. D) the borrowing interest rate decreases. ANSWER C
Date: September 10th, 2020
If money is superneutral, A) a one-time change in the money supply has no real impact. B) a one-time change in the money supply has a real impact. C) a change in the money growth rate has no real impact. D) a change in the money growth rate has a real impact. ANSWER C
Date: September 10th, 2020
