Reductions in inflation have no cost in terms of lower output in ________. A) traditional Keynesian theory B) new Keynesian theory C) real business cycle theory D) traditional and new Keynesian theory ANSWER C
Date: September 10th, 2020
An important consequence of financial deepening is ________. A) an increase in the number of new firms B) a sharp increase in levels of saving & investment C) higher profit rates D) an expansion of bank loans relative to other funding sources ANSWER A
Date: September 10th, 2020
Lifetime wealth is A) the quantity of assets the consumer has in the current period. B) current income plus future income. C) current income minus discounted future taxes. D) the present value of disposable income. ANSWER D
Date: September 10th, 2020
The management of expectations has increased in importance in policymaking in recent decades with the rise of ________. A) traditional Keynesian theory B) institutionalist theory C) torsion theory D) new Keynesian theory ANSWER D
Date: September 10th, 2020
We collapse the consumer’s current-period and future-period budget constraints into a single lifetime budget constraint by A) assuming no default. B) substituting for savings. C) eliminating consumption smoothing. D) assuming the consumer knows the future. ANSWER B
Date: September 10th, 2020
Tobin’s q theory adds to neoclassical theory because it ________. A) illustrates the important relationship between tax rates and the incentive to labor B) emphasizes the role played by asset price fluctuations on investment spending C) highlights the impact of a tax increase on business investment D) underlines the relationship between financial innovation and the […]
Date: September 10th, 2020
Compared to dollarization, a currency board A) has a flexible exchange rate. B) has a separate currency. C) conducts independent monetary policy. D) is the same institution. ANSWER B
Date: September 10th, 2020
No distinction is made between the effects of anticipated and unanticipated policy in ________. A) traditional Keynesian theory B) new Keynesian theory C) real business cycle theory D) traditional Keynesian and real business cycle theory ANSWER D
Date: September 10th, 2020
If a macroeconomic variable tends to aid in predicting the future path of real GDP, it is said to be a A) convenient variable. B) coincident variable. C) leading variable. D) lagging variable. ANSWER C
Date: September 10th, 2020
We use a two-period model because A) the business cycle has two phases: contraction and recovery. B) it is the simplest dynamic model. C) we want to make a distinction between young and old households. D) this is the horizon of the politicians that formulate policy. ANSWER B
Date: September 10th, 2020
