Question 1

In the Basic New Keynesian model, if anticipated future inflation decreases,

Accepted Answer

A)  output falls and inflation falls. 
B)  output rises and inflation falls. 
C)  output stays the same and inflation falls. 
D)  output rises and inflation rises. 
E)  output and inflation stay the same. 
A)  output falls and inflation falls. 
B)  output rises and inflation falls. 
C)  output stays the same and inflation falls. 
D)  output rises and inflation rises. 
E)  output and inflation stay the same. C

Question 2

The Phillips curve had a recent resurgence in

Accepted Answer

A)  real business cycle theory. 
B)  New Monetarist economics. 
C)  Neo-Fisherian economics. 
D)  New Keynesian economics. 
E)  New Sticky economics. 
A)  real business cycle theory. 
B)  New Monetarist economics. 
C)  Neo-Fisherian economics. 
D)  New Keynesian economics. 
E)  New Sticky economics. D

Question 3

There are costs associated with

Accepted Answer

A)  uncharted inflation. 
B)  unrealized inflation. 
C)  incipient inflation. 
D)  unanticipated inflation. 
E)  unbelievable inflation. 
A)  uncharted inflation. 
B)  unrealized inflation. 
C)  incipient inflation. 
D)  unanticipated inflation. 
E)  unbelievable inflation. D

Question 4

In the Basic New Keynesian Model, an unconventional policy that works in a liquidity trap is

Accepted Answer

A)  a money supply increase. 
B)  a reduction in the nominal interest rate. 
C)  an increase in the nominal interest rate. 
D)  forward guidance. 
E)  a reduction in the real interest rate. 
A)  a money supply increase. 
B)  a reduction in the nominal interest rate. 
C)  an increase in the nominal interest rate. 
D)  forward guidance. 
E)  a reduction in the real interest rate.

Question 5

In the New Keynesian Rational Expectations model with a Neo-Fisherian Monetary Policy Rule,

Accepted Answer

A)  the central bank exceeds its inflation target forever. 
B)  the central bank undershoots its inflation target for, at most, one period. 
C)  the central bank undershoots its inflation target forever. 
D)  there are two steady states. 
E)  the central bank only undershoots its inflation target in the zero lower bound steady state. 
A)  the central bank exceeds its inflation target forever. 
B)  the central bank undershoots its inflation target for, at most, one period. 
C)  the central bank undershoots its inflation target forever. 
D)  there are two steady states. 
E)  the central bank only undershoots its inflation target in the zero lower bound steady state.

Question 6

In the Basic New Keynesian model, there are two curves:

Accepted Answer

A)  the output supply curve and the money demand curve. 
B)  the output demand curve and the labour supply curve. 
C)  the output supply curve and the Phillips curve. 
D)  the output demand curve and the Phillips curve. 
E)  the money supply curve and the Phillips curve. 
A)  the output supply curve and the money demand curve. 
B)  the output demand curve and the labour supply curve. 
C)  the output supply curve and the Phillips curve. 
D)  the output demand curve and the Phillips curve. 
E)  the money supply curve and the Phillips curve.

Question 7

Neo-Fisherism

Accepted Answer

A)  is widely accepted. 
B)  was introduced Keynes. 
C)  was introduced by Irving Fisher in the 1920s. 
D)  involves thinking about radical new models. 
E)  involves understanding how conventional macroeconomic models work. 
A)  is widely accepted. 
B)  was introduced Keynes. 
C)  was introduced by Irving Fisher in the 1920s. 
D)  involves thinking about radical new models. 
E)  involves understanding how conventional macroeconomic models work.

Question 8

In 1981, inflation in Canada reached

Accepted Answer

A)  20%. 
B)  200%. 
C)  13%. 
D)  5%. 
E)  2%. 
A)  20%. 
B)  200%. 
C)  13%. 
D)  5%. 
E)  2%.

Question 9

In the New Keynesian Rational Expectations model with a Taylor rule, if the central bank follows the Taylor principle, in the steady state in which nominal interest rate is zero,

Accepted Answer

A)  the central bank hits its inflation target. 
B)  inflation is lower than the central bank's target. 
C)  inflation is higher than the central bank's target. 
D)  inflation is greater than zero. 
E)  inflation is zero. 
A)  the central bank hits its inflation target. 
B)  inflation is lower than the central bank's target. 
C)  inflation is higher than the central bank's target. 
D)  inflation is greater than zero. 
E)  inflation is zero.

Question 10

In practice, the Bank of Canada

Accepted Answer

A)  does not target inflation. 
B)  has a dual mandate, just like the U.S. central bank. 
C)  targets inflation, but clearly cares about real economic activity too. 
D)  cares only about the path for the money supply. 
E)  targets anticipated future inflation. 
A)  does not target inflation. 
B)  has a dual mandate, just like the U.S. central bank. 
C)  targets inflation, but clearly cares about real economic activity too. 
D)  cares only about the path for the money supply. 
E)  targets anticipated future inflation.

Question 11

The Phillips curve was first noticed in data for

Accepted Answer

A)  the United Kingdom. 
B)  the United States. 
C)  Canada. 
D)  Zimbabwe. 
E)  Russia. 
A)  the United Kingdom. 
B)  the United States. 
C)  Canada. 
D)  Zimbabwe. 
E)  Russia.

Question 12

In the Basic New Keynesian model, if anticipated future inflation increases, the central bank should

Accepted Answer

A)  hold the nominal interest rate constant. 
B)  increase the nominal interest rate one-for-one with the decrease in the anticipated future inflation rate. 
C)  reduce the nominal interest rate one-for-one with the decrease in the anticipated future inflation rate. 
D)  increase the nominal interest rate less than one-for-one with the decrease in the anticipated future inflation rate. 
E)  reduce the nominal interest rate less than one-for-one with the decrease in the anticipated future inflation rate. 
A)  hold the nominal interest rate constant. 
B)  increase the nominal interest rate one-for-one with the decrease in the anticipated future inflation rate. 
C)  reduce the nominal interest rate one-for-one with the decrease in the anticipated future inflation rate. 
D)  increase the nominal interest rate less than one-for-one with the decrease in the anticipated future inflation rate. 
E)  reduce the nominal interest rate less than one-for-one with the decrease in the anticipated future inflation rate.

Question 13

In the New Keynesian Rational Expectations Model, in the Phillips curve relationship,

Accepted Answer

A)  inflation does not depend on anticipated future inflation. 
B)  inflation increases one-for-one with anticipated future inflation. 
C)  inflation increases more than one-for-one with anticipated future inflation. 
D)  inflation increases less than one-for-one with anticipated future inflation. 
E)  inflation decreases when anticipated future inflation increases. 
A)  inflation does not depend on anticipated future inflation. 
B)  inflation increases one-for-one with anticipated future inflation. 
C)  inflation increases more than one-for-one with anticipated future inflation. 
D)  inflation increases less than one-for-one with anticipated future inflation. 
E)  inflation decreases when anticipated future inflation increases.

Question 14

"Secular stagnation" is an idea popularized by

Accepted Answer

A)  Larry Winters. 
B)  Ben Bernanke. 
C)  Milton Berle. 
D)  Lawrence Summers. 
E)  John Maynard Keynes. 
A)  Larry Winters. 
B)  Ben Bernanke. 
C)  Milton Berle. 
D)  Lawrence Summers. 
E)  John Maynard Keynes.

Question 15

Discuss the key ideas in Neo-Fisherism. Discuss how Neo-Fisherism departs from conventional ideas about how central banking works, and why central bankers may have trouble accepting Neo-Fisherian ideas.

Accepted Answer

Neo-Fisherians argue that central banker

Question 16

In the New Keynesian Rational Expectations model with a Taylor rule, if the central bank follows the Taylor principle,

Accepted Answer

A)  there is no steady state. 
B)  there are three steady states. 
C)  there are many steady states. 
D)  there are two steady states. 
E)  there is one steady state. 
A)  there is no steady state. 
B)  there are three steady states. 
C)  there are many steady states. 
D)  there are two steady states. 
E)  there is one steady state.

Question 17

In the New Keynesian Rational Expectations model, when the nominal interest rate is constant forever,

Accepted Answer

A)  there is one equilibrium, which does not satisfy the long-run Fisher relation. 
B)  there are two equilibria, both of which satisfy the long-run Fisher relation. 
C)  there are many equilibria, none of which satisfy the long-run Fisher relation. 
D)  there is one equilibrium, and it satisfies the long-run Fisher relation. 
E)  there are many equilibria, but each equilibrium satisfies the Fisher relation in the long run. 
A)  there is one equilibrium, which does not satisfy the long-run Fisher relation. 
B)  there are two equilibria, both of which satisfy the long-run Fisher relation. 
C)  there are many equilibria, none of which satisfy the long-run Fisher relation. 
D)  there is one equilibrium, and it satisfies the long-run Fisher relation. 
E)  there are many equilibria, but each equilibrium satisfies the Fisher relation in the long run.

Question 18

When firms are subject to Calvo pricing,

Accepted Answer

A)  they price their output at the Calvo lower bound. 
B)  they can change their prices at will. 
C)  they change their prices every other year. 
D)  when they change their prices is determined at random. 
E)  they can never change their prices. 
A)  they price their output at the Calvo lower bound. 
B)  they can change their prices at will. 
C)  they change their prices every other year. 
D)  when they change their prices is determined at random. 
E)  they can never change their prices.

Question 19

In the Basic New Keynesian model, if the central bank is initially achieving its goals, and the natural rate of interest rises, the central bank should

Accepted Answer

A)  reduce the nominal interest rate by the amount of the natural real interest rate increase. 
B)  reduce the nominal interest rate by less than the amount of the natural real interest rate increase. 
C)  do nothing. 
D)  increase the nominal interest rate by the amount of the natural real interest rate increase. 
E)  increase the nominal interest rate by less than the amount of the natural real rate of interest increase. 
A)  reduce the nominal interest rate by the amount of the natural real interest rate increase. 
B)  reduce the nominal interest rate by less than the amount of the natural real interest rate increase. 
C)  do nothing. 
D)  increase the nominal interest rate by the amount of the natural real interest rate increase. 
E)  increase the nominal interest rate by less than the amount of the natural real rate of interest increase.

Question 20

The Fisher relation states that

Accepted Answer

A)  the nominal interest rate equals the anticipated future inflation rate minus the real interest rate. 
B)  the real interest rate equals minus the anticipated future inflation rate plus the nominal interest rate. 
C)  the nominal interest rate equals the real interest rate. 
D)  the real interest rate equals the nominal interest rate plus the anticipated future inflation rate. 
E)  the anticipated future inflation rate equals the nominal interest rate plus the real interest rate. 
A)  the nominal interest rate equals the anticipated future inflation rate minus the real interest rate. 
B)  the real interest rate equals minus the anticipated future inflation rate plus the nominal interest rate. 
C)  the nominal interest rate equals the real interest rate. 
D)  the real interest rate equals the nominal interest rate plus the anticipated future inflation rate. 
E)  the anticipated future inflation rate equals the nominal interest rate plus the real interest rate.

In the Basic New Keynesian model, if anticipated future inflation decreases,

The Phillips curve had a recent resurgence in

There are costs associated with

In the Basic New Keynesian Model, an unconventional policy that works in a liquidity trap is

In the New Keynesian Rational Expectations model with a Neo-Fisherian Monetary Policy Rule,

In the Basic New Keynesian model, there are two curves:

Neo-Fisherism

In 1981, inflation in Canada reached

In the New Keynesian Rational Expectations model with a Taylor rule, if the central bank follows the Taylor principle, in the steady state in which nominal interest rate is zero,

In practice, the Bank of Canada

The Phillips curve was first noticed in data for

In the Basic New Keynesian model, if anticipated future inflation increases, the central bank should

In the New Keynesian Rational Expectations Model, in the Phillips curve relationship,

"Secular stagnation" is an idea popularized by

Discuss the key ideas in Neo-Fisherism. Discuss how Neo-Fisherism departs from conventional ideas about how central banking works, and why central bankers may have trouble accepting Neo-Fisherian ideas.

In the New Keynesian Rational Expectations model with a Taylor rule, if the central bank follows the Taylor principle,

In the New Keynesian Rational Expectations model, when the nominal interest rate is constant forever,

When firms are subject to Calvo pricing,

In the Basic New Keynesian model, if the central bank is initially achieving its goals, and the natural rate of interest rises, the central bank should

The Fisher relation states that

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 15: Inflation: Phillips Curves and Neo-Fisherism

In the Basic New Keynesian model, if anticipated future inflation decreases,

The Phillips curve had a recent resurgence in

There are costs associated with

In the Basic New Keynesian Model, an unconventional policy that works in a liquidity trap is

In the New Keynesian Rational Expectations model with a Neo-Fisherian Monetary Policy Rule,

In the Basic New Keynesian model, there are two curves:

Neo-Fisherism

In 1981, inflation in Canada reached

In the New Keynesian Rational Expectations model with a Taylor rule, if the central bank follows the Taylor principle, in the steady state in which nominal interest rate is zero,

In practice, the Bank of Canada

The Phillips curve was first noticed in data for

In the Basic New Keynesian model, if anticipated future inflation increases, the central bank should

In the New Keynesian Rational Expectations Model, in the Phillips curve relationship,

"Secular stagnation" is an idea popularized by

Discuss the key ideas in Neo-Fisherism. Discuss how Neo-Fisherism departs from conventional ideas about how central banking works, and why central bankers may have trouble accepting Neo-Fisherian ideas.

In the New Keynesian Rational Expectations model with a Taylor rule, if the central bank follows the Taylor principle,

In the New Keynesian Rational Expectations model, when the nominal interest rate is constant forever,

When firms are subject to Calvo pricing,

In the Basic New Keynesian model, if the central bank is initially achieving its goals, and the natural rate of interest rises, the central bank should

The Fisher relation states that

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters