Question 1

An expansionary monetary policy is most likely to produce an inflationary effect with little impact on output when the economy

Accepted Answer

A)  is near full employment and the aggregate supply curve is horizontal. 
B)  is near full employment and the aggregate supply curve is vertical. 
C)  has substantial unemployment and the aggregate supply curve is vertical. 
D)  has substantial unemployment and the aggregate supply curve is horizontal. 
A)  is near full employment and the aggregate supply curve is horizontal. 
B)  is near full employment and the aggregate supply curve is vertical. 
C)  has substantial unemployment and the aggregate supply curve is vertical. 
D)  has substantial unemployment and the aggregate supply curve is horizontal.

Question 2

According to the simple quantity theory of money,a change in the money supply of 9.6 percent would lead to a

Accepted Answer

A)  9.6 percent change in velocity. 
B)  9.6 percent change in real GDP. 
C)  9.6 percent change in nominal GDP. 
D)  9.6 percent change in aggregate supply. 
A)  9.6 percent change in velocity. 
B)  9.6 percent change in real GDP. 
C)  9.6 percent change in nominal GDP. 
D)  9.6 percent change in aggregate supply.

Question 3

When analyzing how money affects income,we are analyzing the way in which a

Accepted Answer

A)  stock affects another stock. 
B)  stock affects a flow. 
C)  flow affects another flow. 
D)  flow affects a stock. 
A)  stock affects another stock. 
B)  stock affects a flow. 
C)  flow affects another flow. 
D)  flow affects a stock.

Question 4

The longer and more unpredictable that the policy lags are,the stronger the case for active stabilization policy.

Accepted Answer

A) True 
 B)False

Question 5

As a result of the Fed's unconventional purchase of over $1 trillion of mortgage-backed securities in 2009,interest rates on both mortgage-backed securities and home mortgages increased.

Accepted Answer

A) True 
 B)False

Question 6

In order to consider the equation of exchange an economic model,what must we assume?

Accepted Answer

A)  Real GDP is a constant value. 
B)  Changes in GDP cause changes in the money supply. 
C)  The money supply is constant. 
D)  Changes in velocity are small and predictable. 
A)  Real GDP is a constant value. 
B)  Changes in GDP cause changes in the money supply. 
C)  The money supply is constant. 
D)  Changes in velocity are small and predictable.

Question 7

The monetary stimulus post-September 11,2001,achieved some desired effects within the year.

Accepted Answer

A) True 
 B)False

Question 8

Both approaches-Keynesian and monetarist-are ways of analyzing

Accepted Answer

A)  aggregate supply. 
B)  aggregate demand. 
C)  the average price level. 
D)  government spending and expenditures. 
A)  aggregate supply. 
B)  aggregate demand. 
C)  the average price level. 
D)  government spending and expenditures.

Question 9

If the demand for money is insensitive to the interest rate,then the most effective expansionary policy would be

Accepted Answer

A)  fiscal policy. 
B)  monetary policy. 
C)  neither fiscal nor monetary policy. 
D)  both fiscal and monetary policy. 
A)  fiscal policy. 
B)  monetary policy. 
C)  neither fiscal nor monetary policy. 
D)  both fiscal and monetary policy.

Question 10

During the financial crisis of 2007-2009 the interest rate spread on mortgage-backed securities over Treasury bills

Accepted Answer

A)  increased tremendously. 
B)  increased moderately. 
C)  decreased moderately. 
D)  decreased tremendously. 
A)  increased tremendously. 
B)  increased moderately. 
C)  decreased moderately. 
D)  decreased tremendously.

Question 11

If the aggregate supply curve is flat,

Accepted Answer

A)  expansionary fiscal or monetary policy will cause a good deal of inflation with little increase in real output. 
B)  expansionary fiscal or monetary policy will buy large gains in real output at low cost in terms of inflation. 
C)  a contractionary stabilization policy is an effective way to reduce inflation. 
D)  decreasing the income tax will not shift aggregate demand. 
A)  expansionary fiscal or monetary policy will cause a good deal of inflation with little increase in real output. 
B)  expansionary fiscal or monetary policy will buy large gains in real output at low cost in terms of inflation. 
C)  a contractionary stabilization policy is an effective way to reduce inflation. 
D)  decreasing the income tax will not shift aggregate demand.

Question 12

By purchasing large amounts of mortgage-backed securities (MBS)in 2009,the Federal Reserve's goal was to

Accepted Answer

A)  raise the price of MBS and raise their yields. 
B)  raise the price of MBS and lower their yields. 
C)  lower the price of MBS and raise their yields. 
D)  lower the price of MBS and lower their yields. 
A)  raise the price of MBS and raise their yields. 
B)  raise the price of MBS and lower their yields. 
C)  lower the price of MBS and raise their yields. 
D)  lower the price of MBS and lower their yields.

Question 13

If nominal GDP is 8,100 billion florins and the money supply is 900 billion florins,the velocity of circulation is

Accepted Answer

A)  900.0. 
B)  90.0. 
C)  81.0. 
D)  9.0. 
E)  8.1. 
A)  900.0. 
B)  90.0. 
C)  81.0. 
D)  9.0. 
E)  8.1.

Question 14

Believers in a fixed-rule approach to stabilization policy propose that

Accepted Answer

A)  Congress should balance the high employment budget. 
B)  the Fed should keep the money supply growth constant. 
C)  the economy be stabilized by automatic mechanisms. 
D)  All of the above are correct. 
A)  Congress should balance the high employment budget. 
B)  the Fed should keep the money supply growth constant. 
C)  the economy be stabilized by automatic mechanisms. 
D)  All of the above are correct.

Question 15

An employee of Macro.com Corporation is paid $5,000 a month,which she spends regularly throughout the month until she has a zero balance in her checking account at the end of the month.If the corporation changes to a semi-monthly payroll schedule,how will the employee's average cash balance change? Assume she does not change her spending pattern when she is now paid twice a month.

Accepted Answer

A)  It changes from $5,000 to $2,500 per month. 
B)  It changes from $2,500 to $1,250 per month. 
C)  It changes from $1,250 to $625 per month. 
D)  It changes from $500 to $250 per month. 
A)  It changes from $5,000 to $2,500 per month. 
B)  It changes from $2,500 to $1,250 per month. 
C)  It changes from $1,250 to $625 per month. 
D)  It changes from $500 to $250 per month.

Question 16

The efficiency of the payments' mechanism affects

Accepted Answer

A)  the speed with which money can be exchanged for other assets. 
B)  how quickly individual loan applications will be approved. 
C)  how slowly individuals deplete their cash balances. 
D)  the speed with which financial institutions can process checks and other funds. 
A)  the speed with which money can be exchanged for other assets. 
B)  how quickly individual loan applications will be approved. 
C)  how slowly individuals deplete their cash balances. 
D)  the speed with which financial institutions can process checks and other funds.

Question 17

When will stabilization policy be most effective in combating recessions?

Accepted Answer

A)  when AS is flat 
B)  when AS is very steep 
C)  when AS has a moderately upward slope 
D)  when AS has a moderately downward slope. 
A)  when AS is flat 
B)  when AS is very steep 
C)  when AS has a moderately upward slope 
D)  when AS has a moderately downward slope.

Question 18

If you believe that velocity is constant and that the aggregate supply curve is vertical,then the quantity theory of money would predict that a doubling of the money supply would cause a doubling of

Accepted Answer

A)  nominal output and real output. 
B)  nominal output and no change in real output. 
C)  real output and no change in nominal output. 
D)  the price level and real output. 
A)  nominal output and real output. 
B)  nominal output and no change in real output. 
C)  real output and no change in nominal output. 
D)  the price level and real output.

Question 19

The velocity of circulation has remained constant over long periods of time.

Accepted Answer

A) True 
 B)False

Question 20

Advocates of active stabilization policies,in defense of their views,argue that

Accepted Answer

A)  stabilization is less necessary than is commonly advocated by monetarists. 
B)  discretionary policy in not necessary because automatic stabilizers are sufficient. 
C)  perfect stabilization is not possible,but moderate improvements in economic performance are possible,such as the response to the events of September 11,2001. 
D)  All of the above are correct. 
A)  stabilization is less necessary than is commonly advocated by monetarists. 
B)  discretionary policy in not necessary because automatic stabilizers are sufficient. 
C)  perfect stabilization is not possible,but moderate improvements in economic performance are possible,such as the response to the events of September 11,2001. 
D)  All of the above are correct.

An expansionary monetary policy is most likely to produce an inflationary effect with little impact on output when the economy

According to the simple quantity theory of money,a change in the money supply of 9.6 percent would lead to a

When analyzing how money affects income,we are analyzing the way in which a

The longer and more unpredictable that the policy lags are,the stronger the case for active stabilization policy.

As a result of the Fed's unconventional purchase of over $1 trillion of mortgage-backed securities in 2009,interest rates on both mortgage-backed securities and home mortgages increased.

In order to consider the equation of exchange an economic model,what must we assume?

The monetary stimulus post-September 11,2001,achieved some desired effects within the year.

Both approaches-Keynesian and monetarist-are ways of analyzing

If the demand for money is insensitive to the interest rate,then the most effective expansionary policy would be

During the financial crisis of 2007-2009 the interest rate spread on mortgage-backed securities over Treasury bills

If the aggregate supply curve is flat,

By purchasing large amounts of mortgage-backed securities (MBS)in 2009,the Federal Reserve's goal was to

If nominal GDP is 8,100 billion florins and the money supply is 900 billion florins,the velocity of circulation is

Believers in a fixed-rule approach to stabilization policy propose that

The efficiency of the payments' mechanism affects

When will stabilization policy be most effective in combating recessions?

If you believe that velocity is constant and that the aggregate supply curve is vertical,then the quantity theory of money would predict that a doubling of the money supply would cause a doubling of

The velocity of circulation has remained constant over long periods of time.

Advocates of active stabilization policies,in defense of their views,argue that

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

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Exam 15: The Debate Over Monetary and Fiscal Policy

An expansionary monetary policy is most likely to produce an inflationary effect with little impact on output when the economy

According to the simple quantity theory of money,a change in the money supply of 9.6 percent would lead to a

When analyzing how money affects income,we are analyzing the way in which a

The longer and more unpredictable that the policy lags are,the stronger the case for active stabilization policy.

As a result of the Fed's unconventional purchase of over $1 trillion of mortgage-backed securities in 2009,interest rates on both mortgage-backed securities and home mortgages increased.

In order to consider the equation of exchange an economic model,what must we assume?

The monetary stimulus post-September 11,2001,achieved some desired effects within the year.

Both approaches-Keynesian and monetarist-are ways of analyzing

If the demand for money is insensitive to the interest rate,then the most effective expansionary policy would be

During the financial crisis of 2007-2009 the interest rate spread on mortgage-backed securities over Treasury bills

If the aggregate supply curve is flat,

By purchasing large amounts of mortgage-backed securities (MBS)in 2009,the Federal Reserve's goal was to

If nominal GDP is 8,100 billion florins and the money supply is 900 billion florins,the velocity of circulation is

Believers in a fixed-rule approach to stabilization policy propose that

The efficiency of the payments' mechanism affects

When will stabilization policy be most effective in combating recessions?

If you believe that velocity is constant and that the aggregate supply curve is vertical,then the quantity theory of money would predict that a doubling of the money supply would cause a doubling of

The velocity of circulation has remained constant over long periods of time.

Advocates of active stabilization policies,in defense of their views,argue that

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters