Question 1

Which of the following would be evidence against rational expectations?

Accepted Answer

A) unpredictable changes in policy have real effects. 
B) new information leads to changes in output. 
C) the public never make mistakes with respect to price level predictions. 
D) changes in stock prices change much more often than new information becomes available. 
A) unpredictable changes in policy have real effects. 
B) new information leads to changes in output. 
C) the public never make mistakes with respect to price level predictions. 
D) changes in stock prices change much more often than new information becomes available.

Question 2

New classical macroeconomists believe that

Accepted Answer

A) markets clear each and every period. 
B) the labor market does not clear. 
C) individuals are locked into money wage constraints. 
D) individuals face market constraints in their ability to act in their own self-interest. 
E) none of the above. 
A) markets clear each and every period. 
B) the labor market does not clear. 
C) individuals are locked into money wage constraints. 
D) individuals face market constraints in their ability to act in their own self-interest. 
E) none of the above.

Question 3

Which of the following statements is correct?

Accepted Answer

A) In the new classical view,the money wage is assumed to adjust quickly to clear the labor market whereas in the Keynesian view,the money wage is sticky in a downward direction. 
B) In the new classical view,the money wage is sticky in a downward direction whereas the money wage is assumed to adjust quickly to clear the labor market in the Keynesian view. 
C) In both the new classical and the Keynesian views,the money wage is assumed to adjust quickly to clear the labor market. 
D) In both the new classical and the Keynesian views,the money wage is sticky in a downward direction. 
A) In the new classical view,the money wage is assumed to adjust quickly to clear the labor market whereas in the Keynesian view,the money wage is sticky in a downward direction. 
B) In the new classical view,the money wage is sticky in a downward direction whereas the money wage is assumed to adjust quickly to clear the labor market in the Keynesian view. 
C) In both the new classical and the Keynesian views,the money wage is assumed to adjust quickly to clear the labor market. 
D) In both the new classical and the Keynesian views,the money wage is sticky in a downward direction.

Question 4

Which of the following statements is (are)correct?

Accepted Answer

A) The central policy tenet of the new classical economics is that aggregate demand management cannot achieve stabilization of real variables. 
B) According to the new classical view,systematic monetary policy actions that change aggregate demand will not affect output and employment even in the short run. 
C) According to the classicists,systematic fiscal policy actions that change aggregate demand will not affect output and employment even in the short run. 
D) All of the above 
E) None of the above 
A) The central policy tenet of the new classical economics is that aggregate demand management cannot achieve stabilization of real variables. 
B) According to the new classical view,systematic monetary policy actions that change aggregate demand will not affect output and employment even in the short run. 
C) According to the classicists,systematic fiscal policy actions that change aggregate demand will not affect output and employment even in the short run. 
D) All of the above 
E) None of the above

Question 5

Compared to adaptive expectations,rational expectations would imply that the transition between the short-run and the long-run will take:

Accepted Answer

A) the same amount of time. 
B) a longer period of time. 
C) a variable period of time. 
D) less time. 
A) the same amount of time. 
B) a longer period of time. 
C) a variable period of time. 
D) less time.

Question 6

Define the concept of "rational expectations".Do rational expectations mean that individuals do not make mistakes when forming their expectations?

Accepted Answer

According to the rational expectations h

Question 7

In the early 1980s,the disinflation in the United States

Accepted Answer

A) was accompanied by rapidly growing deficits. 
B) was costless in terms of output and employment effects. 
C) was the result of a well-publicized expansionary monetary policy. 
D) did not result in a severe recession. 
A) was accompanied by rapidly growing deficits. 
B) was costless in terms of output and employment effects. 
C) was the result of a well-publicized expansionary monetary policy. 
D) did not result in a severe recession.

Question 8

In the new classical model,stabilization policies

Accepted Answer

A) cannot affect output and employment in either the short run or the long run. 
B) affect output and employment only in the short run. 
C) have no effect on output and employment,even in the short run. 
D) affect output and employment only in the long run. 
A) cannot affect output and employment in either the short run or the long run. 
B) affect output and employment only in the short run. 
C) have no effect on output and employment,even in the short run. 
D) affect output and employment only in the long run.

Question 9

Regarding fiscal policy,the new classical economists

Accepted Answer

A) are in favor of stability. 
B) attempt to avoid excessive and inflationary stimulus. 
C) want to avoid erratic government deficit spending. 
D) All of the above 
E) None of the above 
A) are in favor of stability. 
B) attempt to avoid excessive and inflationary stimulus. 
C) want to avoid erratic government deficit spending. 
D) All of the above 
E) None of the above

Question 10

According to the new classical theory,a monetary surprise will

Accepted Answer

A) shift the labor supply curve to the right in the short run. 
B) shift the labor supply curve to the left in the short run. 
C) not shift the labor supply curve in the short run. 
D) shift the aggregate supply curve to the left in the short run. 
E) shift the aggregate supply curve to the right in the short run. 
A) shift the labor supply curve to the right in the short run. 
B) shift the labor supply curve to the left in the short run. 
C) not shift the labor supply curve in the short run. 
D) shift the aggregate supply curve to the left in the short run. 
E) shift the aggregate supply curve to the right in the short run.

Question 11

Explain what is meant by an auction market.Is an auction market perfectly competitive?

Accepted Answer

In the auction market,the money wage is

Which of the following would be evidence against rational expectations?

New classical macroeconomists believe that

Which of the following statements is correct?

Which of the following statements is (are)correct?

Compared to adaptive expectations,rational expectations would imply that the transition between the short-run and the long-run will take:

Define the concept of "rational expectations".Do rational expectations mean that individuals do not make mistakes when forming their expectations?

In the early 1980s,the disinflation in the United States

In the new classical model,stabilization policies

Regarding fiscal policy,the new classical economists

According to the new classical theory,a monetary surprise will

Explain what is meant by an auction market.Is an auction market perfectly competitive?

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

Exam 11: New Classical Economics

Which of the following would be evidence against rational expectations?

New classical macroeconomists believe that

Which of the following statements is correct?

Which of the following statements is (are)correct?

Compared to adaptive expectations,rational expectations would imply that the transition between the short-run and the long-run will take:

Define the concept of "rational expectations".Do rational expectations mean that individuals do not make mistakes when forming their expectations?

In the early 1980s,the disinflation in the United States

In the new classical model,stabilization policies

Regarding fiscal policy,the new classical economists

According to the new classical theory,a monetary surprise will

Explain what is meant by an auction market.Is an auction market perfectly competitive?

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters