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
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
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 […]
Government-backed deposit insurance ________. A) protects “good” banks from the misdeeds of “bad” banks B) is intended to encourage banks to pursue high-risk activities C) is an example of prudential regulation D) is an example of government-directed credit ANSWER A
In an open economy, the law of one price implies that A) the domestic economy may have a comparative advantage in only half the goods it produces. B) perfect competition holds in all domestic markets. C) purchasing power parity should hold. D) the nominal exchange rate should equal one. ANSWER C
In the endogenous growth model presented in the text, an increase in the efficiency of human capital accumulation A) increases the growth rate of human capital and increases the growth rate of output. B) increases the growth rate of human capital and decreases the growth rate of output. C) decreases the growth rate of human […]
The property that macroeconomic variables fluctuate together in patterns that exhibit strong regularities is called A) coincidence. B) co-movement. C) correlation. D) coexistence. ANSWER B
The nominal exchange rate is the A) domestic currency price of foreign currency. B) foreign currency price of domestic currency. C) price of domestic goods in terms of foreign goods. D) price of foreign goods in terms of domestic goods. ANSWER A
Consider the two graphs above. Suppose rising fuel costs makes it more expensive to move goods to and from warehouses. This would ________ the desired level of inventories, as depicted in graph ________. A) increase; B B) increase; A C) decrease; B D) decrease; A ANSWER C
Before 2000, the three most recent U.S. recessions occurred in A) 1969-1973, 1979-1982, and 1994-1995. B) 1973-1975, 1982-1985, and 1990-1991. C) 1973-1975, 1981-1982, and 1990-1991. D) 1981-1982, 1990-1991, and 1998-1999. ANSWER C
