Question 1

When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then

Accepted Answer

A) inflation will be lower. 
B) output will be at its potential. 
C) output will be unchanged. 
D) inflation will be unchanged. 
A) inflation will be lower. 
B) output will be at its potential. 
C) output will be unchanged. 
D) inflation will be unchanged.

Question 2

If the economy suffers a permanent negative supply shock because there is an increase in regulations that permanently reduce the level of potential output,then

Accepted Answer

A) potential output falls. 
B) the long-run aggregate supply curve shifts leftward. 
C) the short-run aggregate supply curve shifts upward. 
D) all of the above. 
A) potential output falls. 
B) the long-run aggregate supply curve shifts leftward. 
C) the short-run aggregate supply curve shifts upward. 
D) all of the above.

Question 3

The implementation lag is

Accepted Answer

A) the time it takes for policy makers to obtain data indicating what is happening in the economy. 
B) the time it takes for policy makers to be sure of what the data are signaling about the future course of the economy. 
C) the time it takes to pass legislation to implement a particular policy. 
D) the time it takes for policy makers to change policy instruments once they have decided on the new policy. 
E) the time it takes for the policy actually to have an impact on the economy. 
A) the time it takes for policy makers to obtain data indicating what is happening in the economy. 
B) the time it takes for policy makers to be sure of what the data are signaling about the future course of the economy. 
C) the time it takes to pass legislation to implement a particular policy. 
D) the time it takes for policy makers to change policy instruments once they have decided on the new policy. 
E) the time it takes for the policy actually to have an impact on the economy.

Question 4

Nonactivists of the policies believe that

Accepted Answer

A) wages and prices are very flexible. 
B) the self-correcting mechanism is very rapid. 
C) government action is unnecessary. 
D) all of the above. 
A) wages and prices are very flexible. 
B) the self-correcting mechanism is very rapid. 
C) government action is unnecessary. 
D) all of the above.

Question 5

When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then

Accepted Answer

A) inflation will be lower. 
B) output will be at its potential. 
C) output will be lower. 
D) inflation will not change. 
E) both B and C. 
A) inflation will be lower. 
B) output will be at its potential. 
C) output will be lower. 
D) inflation will not change. 
E) both B and C.

Question 6

The combination of a successful wage push by workers and the government's commitment to high employment leads to

Accepted Answer

A) demand-pull inflation. 
B) supply-side inflation. 
C) supply-shock inflation. 
D) cost-push inflation. 
A) demand-pull inflation. 
B) supply-side inflation. 
C) supply-shock inflation. 
D) cost-push inflation.

Question 7

The economist who proposed that,"Inflation is always and everywhere a monetary phenomenon" was

Accepted Answer

A) John Maynard Keynes. 
B) John R.Hicks. 
C) Milton Friedman. 
D) Franco Modigliani. 
A) John Maynard Keynes. 
B) John R.Hicks. 
C) Milton Friedman. 
D) Franco Modigliani.

Question 8

The time it takes to pass legislation to implement a particular policy is called

Accepted Answer

A) the data lag. 
B) the recognition lag. 
C) the legislative lag. 
D) the implementation lag. 
E) the effectiveness lag. 
A) the data lag. 
B) the recognition lag. 
C) the legislative lag. 
D) the implementation lag. 
E) the effectiveness lag.

When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then

If the economy suffers a permanent negative supply shock because there is an increase in regulations that permanently reduce the level of potential output,then

The implementation lag is

Nonactivists of the policies believe that

When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then

The combination of a successful wage push by workers and the government's commitment to high employment leads to

The economist who proposed that,"Inflation is always and everywhere a monetary phenomenon" was

The time it takes to pass legislation to implement a particular policy is called

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Exam 23: Monetary Policy Theory

When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then

If the economy suffers a permanent negative supply shock because there is an increase in regulations that permanently reduce the level of potential output,then

The implementation lag is

Nonactivists of the policies believe that

When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then

The combination of a successful wage push by workers and the government's commitment to high employment leads to

The economist who proposed that,"Inflation is always and everywhere a monetary phenomenon" was

The time it takes to pass legislation to implement a particular policy is called

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters