The endowment point is the consumption bundle in which A) first-period consumption is equal to zero. B) second-period consumption is equal to zero. C) the consumer finds the most utility. D) consumption is equal to disposable income in each period. ANSWER D
Date: September 10th, 2020
How do the new Keynesian and real business cycle models differ on the ability of inflationary expectations to affect output? What will be an ideal response? ANSWER Both models recognize the influence of expectations on aggregate demand and, thus, on inflation. Both models imply that expected high inflation is a self-fulfilling prophecy, which is […]
Date: September 10th, 2020
________ is among the ingredients of “a first-rate financial system.” A) Government-directed credit to key economic sectors B) Greater efficiency of state-owned banks C) Legal reform to strengthen financial contracts D) Saving rates of 20% or more ANSWER C
Date: September 10th, 2020
Savings in our model are A) durable consumption. B) non-durable consumption. C) postponed consumption. D) money. ANSWER C
Date: September 10th, 2020
Real investment tends to be A) procyclical and less variable than real GDP. B) procyclical and more variable than real GDP. C) countercyclical and less variable than real GDP. D) countercyclical and more variable than real GDP. ANSWER B
Date: September 10th, 2020
When the inflation rate falls, what happens, and why, to the MP, IS, and AD curves? What will be an ideal response? ANSWER A decrease in the inflation rate will, typically, raise the real interest rate, given the nominal interest rate, because expected inflation will have fallen. To prevent this increase in the real […]
Date: September 10th, 2020
Which of the following institutions plays the role of an international lender of last resort? A) the World Bank B) the International Monetary Fund C) the European Monetary System D) the Federal Reserve System ANSWER B
Date: September 10th, 2020
China’s recent economic performance is most similar to the experience of ________. A) the United States in the 1890s B) Japan in the 1960s & 1970s C) Cuba in the 1990s D) the Soviet Union in the 1950s & 1960s ANSWER D
Date: September 10th, 2020
Real consumption tends to be A) procyclical and less variable than real GDP. B) procyclical and more variable than real GDP. C) countercyclical and less variable than real GDP. D) countercyclical and more variable than real GDP. ANSWER A
Date: September 10th, 2020
A key international institution that plays an important role in exchange rate determination is the A) U.S. Currency Board. B) European Central Bank. C) World Bank. D) International Monetary Fund. ANSWER D
Date: September 10th, 2020
