According to the policy trilemma hypothesis, of the three goals generally pursued by policymakers in an open economy, A) only one of the goals is possible to achieve at any one time. B) it is possible for a country to achieve two of the goals at the same time, but not all three. C) it […]
Date: September 10th, 2020
As the financial crisis became more severe in 2008, the Federal Reserve undertook a(n) ________ of monetary policy, an effect of which is to ________ inflation. A) contraction; raise B) easing; raise C) contraction; lower D) easing; lower E) none of the above ANSWER B
Date: September 10th, 2020
The government deficit A) is equal to the government surplus plus taxes minus government spending. B) is equal to GDP minus GNP. C) is equal to disposable income plus the current account surplus. D) is equal to the negative of government saving. ANSWER D
Date: September 10th, 2020
The domestic real interest rate (r) for a given country must be the same as the world real interest rate (rw) ________. A) if perfect capital mobility is assumed B) because with no barriers to capital flows, if rw > r domestic residents would just borrow abroad putting upward pressures on the domestic rate until […]
Date: September 10th, 2020
From the perspective of households and businesses deciding where to deposit their money, the key advantage of the private loans issued by commercial banks is ________. A) transparency B) marketability C) incentive for the bank to collect information D) relatively high interest rates ANSWER C
Date: September 10th, 2020
Shocks to long-run aggregate supply can be a source of business fluctuations ________. A) only in real business cycle models B) only in new Keynesian models C) in both real business cycle and new Keynesian models D) only if the money supply rises ANSWER C
Date: September 10th, 2020
Ricardian equivalence suggests that government budget deficits generated by decreases in current taxes A) increase the current account surplus. B) decrease the current account surplus. C) have no effect on the current account surplus. D) have unpredictable effects on the current account surplus. ANSWER C
Date: September 10th, 2020
What is a characteristic of human capital? A) rivalry B) rapid accumulation C) private ownership D) concavity ANSWER C
Date: September 10th, 2020
A decision to increase the parameter λ in the MP curve is an example of ________. A) autonomous easing B) leftward movement along the curve C) rightward movement along the curve D) endogenous response E) autonomous tightening ANSWER E
Date: September 10th, 2020
The standard IS curve is adjusted in new Keynesian theory to account for ________. A) the forward-looking behavior of households and firms B) the difference between real and nominal variables C) changes in GDP, or Gross Domestic Product D) the impact of a rising national debt ANSWER A
Date: September 10th, 2020
