In the aggregate demand curve, the endogenous variable is ________. A) output B) inflation C) the real interest rate D) real money balances E) none of the above ANSWER A
Date: September 10th, 2020
Based on the Saving-Investment Diagram, if the domestic real interest rate is indicated by B, then ________. A) the value of net exports is zero B) the diagram represents a closed economy C) the world real interest rate is indicated by A D) the difference between values F and E measures the net capital inflow […]
Date: September 10th, 2020
If purchasing power parity holds, the exchange rate (e) can be expressed as a function of the domestic price (P) and the foreign price (P*) as A) e = P – P*. B) e = P* – P. C) e = P* + P. D) e = P/P*. ANSWER D
Date: September 10th, 2020
Long-run aggregate supply shocks are a source of business cycle fluctuations in ________. A) traditional Keynesian and new Keynesian theory B) new Keynesian and real business cycle theory C) real business cycle and traditional Keynesian theory D) traditional Keynesian, new Keynesian and real business cycle theory ANSWER B
Date: September 10th, 2020
Robert Lucas has popularized the notion that with respect to A) severity, business cycles are all alike. B) causation, business cycles are all alike. C) quantitative behavior of co-movements among series, business cycles are all alike. D) qualitative behavior of co-movements among series, business cycles are all alike. ANSWER D
Date: September 10th, 2020
Between September 2009 and September 2010, the recovery of private inventories, as shown in Figure 19.1, was far stronger than the overall economy’s recovery from the Great Recession. Which is the most reasonable inference? A) Persistently weak aggregate demand gave producers no alternative but to place current output into storage. B) Businesses overestimated the strength […]
Date: September 10th, 2020
An increase in the real interest rate occurs when ________. A) monetary policy responds automatically to an increase in inflation B) expected inflation increases, relative to the nominal interest rate C) an increase in autonomous spending causes an increase in equilibrium output D) all of the above E) none of the above ANSWER A
Date: September 10th, 2020
A principal reason that purchasing power parity does not hold exactly in practice is A) that foreign and domestic assets are not perfect substitutes. B) the existence of non-traded goods. C) that consumers in different countries have different preferences. D) that costs of production are not the same in all countries. ANSWER B
Date: September 10th, 2020
Long-run aggregate supply shocks are not a source of business cycle fluctuations in the ________, because ________. A) traditional Keynesian model; long-run supply shocks are incompatible with adaptive expectations B) traditional Keynesian model; demand fluctuations are considered of dominant importance C) real business cycle model; shocks cannot persist in the long run, when prices and […]
Date: September 10th, 2020
The three business cycle models differ mostly in their treatment of ________. A) aggregate demand B) short-run aggregate supply C) long-run aggregate supply D) productivity shocks ANSWER B
Date: September 10th, 2020
