Question 1

The questions with which Chapter 17 is concerned include each of the following except

Accepted Answer

A)  how might the macroeconomics taught two decades from now differ from the macroeconomics taught today? 
B)  what have been the principal changes in the way macroeconomics is taught over the past quarter century? 
C)  what additional changes took place in the hundred years before that - from roughly 1880 to roughly 1980? 
D)  what direction will macroeconomics take if the real business cycle research program is successful? 
A)  how might the macroeconomics taught two decades from now differ from the macroeconomics taught today? 
B)  what have been the principal changes in the way macroeconomics is taught over the past quarter century? 
C)  what additional changes took place in the hundred years before that - from roughly 1880 to roughly 1980? 
D)  what direction will macroeconomics take if the real business cycle research program is successful?

Question 2

According to real business cycle theorists, each of the following is a reason why hours worked would decrease except

Accepted Answer

A)  the current wage increases relative to the future wage. 
B)  the future wage increases relative to the current wage. 
C)  the real interest rate decreases. 
D)  highly valuable investment opportunities become more scarce. 
A)  the current wage increases relative to the future wage. 
B)  the future wage increases relative to the current wage. 
C)  the real interest rate decreases. 
D)  highly valuable investment opportunities become more scarce.

Question 3

Each of the following was part of Milton Friedman's critique of the dominant tradition in macroeconomics in the 1960s except

Accepted Answer

A)  then-standard models greatly overestimated the government's ability to manage and control the economy. 
B)  then-standard models greatly overestimated the power of fiscal policy and greatly underestimated the power of monetary policy. 
C)  then-standard models greatly underestimated the degree of fixed prices. 
D)  the measurement of the money supply told you most of what you needed to know about how economic policy was working. 
A)  then-standard models greatly overestimated the government's ability to manage and control the economy. 
B)  then-standard models greatly overestimated the power of fiscal policy and greatly underestimated the power of monetary policy. 
C)  then-standard models greatly underestimated the degree of fixed prices. 
D)  the measurement of the money supply told you most of what you needed to know about how economic policy was working.

Question 4

The part of modern macroeconomics that is in least satisfactory shape

Accepted Answer

A)  is in the area of aggregate demand. 
B)  is in the area of aggregate supply. 
C)  is in the area of international trade. 
D)  is in the area of inflation. 
A)  is in the area of aggregate demand. 
B)  is in the area of aggregate supply. 
C)  is in the area of international trade. 
D)  is in the area of inflation.

Question 5

In the standard view, fiscal debts and deficits

Accepted Answer

A)  in the long run crowd out investment and shift the economy to a less favorable long-run steady-state growth path. 
B)  in the long run crowd out consumption and shift the economy to a less favorable long-run steady-state growth path. 
C)  in the long run crowd out savings and shift the economy to a less favorable long-run steady-state growth path. 
D)  in the long run crowd in investment and shift the economy to a more favorable long-run steady-state growth path. 
A)  in the long run crowd out investment and shift the economy to a less favorable long-run steady-state growth path. 
B)  in the long run crowd out consumption and shift the economy to a less favorable long-run steady-state growth path. 
C)  in the long run crowd out savings and shift the economy to a less favorable long-run steady-state growth path. 
D)  in the long run crowd in investment and shift the economy to a more favorable long-run steady-state growth path.

Question 6

According to Ricardian Equivalence

Accepted Answer

A)  the effect of a government spending financed by borrowing should be smaller than the effect of a government spending increase financed by raising taxes. 
B)  the effect of a government spending financed by borrowing should be larger than the effect of a government spending increase financed by raising taxes. 
C)  the effect of a government spending financed by borrowing should be the same as the effect of a government spending increase financed by raising taxes. 
D)  the effect of a government spending financed by borrowing should be smaller than the effect of a government spending increase financed by printing new money. 
A)  the effect of a government spending financed by borrowing should be smaller than the effect of a government spending increase financed by raising taxes. 
B)  the effect of a government spending financed by borrowing should be larger than the effect of a government spending increase financed by raising taxes. 
C)  the effect of a government spending financed by borrowing should be the same as the effect of a government spending increase financed by raising taxes. 
D)  the effect of a government spending financed by borrowing should be smaller than the effect of a government spending increase financed by printing new money.

Question 7

Each of the following is a reason offered by economists to explain why consumers seem unwilling to borrow to maintain consumption spending during a recession except

Accepted Answer

A)  the typical consumer is impatient and risk averse. 
B)  current income is a good proxy for permanent income because of the persistence of income changes. 
C)  the typical consumer is a risk taker. 
D)  economists should take seriously what psychologists have to say about how humans reason. 
A)  the typical consumer is impatient and risk averse. 
B)  current income is a good proxy for permanent income because of the persistence of income changes. 
C)  the typical consumer is a risk taker. 
D)  economists should take seriously what psychologists have to say about how humans reason.

Question 8

According to real business cycle theorists, each of the following is a reason why hours worked would increase except

Accepted Answer

A)  the current wage increases relative to the future wage. 
B)  the future wage increases relative to the current wage. 
C)  the real interest rate increases. 
D)  highly valuable investment opportunities become more plentiful. 
A)  the current wage increases relative to the future wage. 
B)  the future wage increases relative to the current wage. 
C)  the real interest rate increases. 
D)  highly valuable investment opportunities become more plentiful.

Question 9

According to real business cycle theorists, each of the following is a reason why hours worked would decrease except

Accepted Answer

A)  labor becomes less productive. 
B)  the future wage increases relative to the current wage. 
C)  the real interest rate decreases. 
D)  highly valuable investment opportunities become more plentiful. 
A)  labor becomes less productive. 
B)  the future wage increases relative to the current wage. 
C)  the real interest rate decreases. 
D)  highly valuable investment opportunities become more plentiful.

Question 10

Despite the increased ability of households to borrow

Accepted Answer

A)  consumption spending still increases when the economy goes into a recession. 
B)  tax revenue still increases when the economy goes into a recession. 
C)  imports still increases when the economy goes into a recession. 
D)  consumption spending still decreases when the economy goes into a recession. 
A)  consumption spending still increases when the economy goes into a recession. 
B)  tax revenue still increases when the economy goes into a recession. 
C)  imports still increases when the economy goes into a recession. 
D)  consumption spending still decreases when the economy goes into a recession.

Question 11

The questions with which Chapter 17 is concerned include each of the following except

Accepted Answer

A)  how might the macroeconomics taught two decades from now differ from the macroeconomics taught today? 
B)  what have been the principal changes in the way macroeconomics is taught over the past quarter century? 
C)  what additional changes took place in the twenty years before that - from roughly 1960 to roughly 1980? 
D)  what direction will macroeconomics take if the nominal business cycle research program is successful? 
A)  how might the macroeconomics taught two decades from now differ from the macroeconomics taught today? 
B)  what have been the principal changes in the way macroeconomics is taught over the past quarter century? 
C)  what additional changes took place in the twenty years before that - from roughly 1960 to roughly 1980? 
D)  what direction will macroeconomics take if the nominal business cycle research program is successful?

Question 12

Each of the following would have been found in a macroeconomics textbook in 1960 except

Accepted Answer

A)  a discussion of the multiplier. 
B)  the consumption function. 
C)  the relationship between interest rates and the money supply. 
D)  the relationship between production and inflation. 
A)  a discussion of the multiplier. 
B)  the consumption function. 
C)  the relationship between interest rates and the money supply. 
D)  the relationship between production and inflation.

Question 13

According to real business cycle theorists, hours worked will decrease

Accepted Answer

A)  if the current wage increases relative to the future wage. 
B)  if the future wage increases relative to the current wage. 
C)  if the real interest rate increases. 
D)  if highly valuable investment opportunities become more plentiful. 
A)  if the current wage increases relative to the future wage. 
B)  if the future wage increases relative to the current wage. 
C)  if the real interest rate increases. 
D)  if highly valuable investment opportunities become more plentiful.

Question 14

Real business cycle theorists tend to argue that

Accepted Answer

A)  monetary policy has a large impact on production and employment. 
B)  fluctuations in the money stock and interest rates are much more reactions to changes already taking . place in output and employment. 
C)  fiscal policy has a large impact on production and employment. 
D)  changes in consumption spending is the key to fluctuations in production and employment. 
A)  monetary policy has a large impact on production and employment. 
B)  fluctuations in the money stock and interest rates are much more reactions to changes already taking . place in output and employment. 
C)  fiscal policy has a large impact on production and employment. 
D)  changes in consumption spending is the key to fluctuations in production and employment.

Question 15

Real business cycle theorists believe that the key to understanding business cycles is

Accepted Answer

A)  the need to understand the determinants of nominal aggregate demand. 
B)  the need to understand the division of changes in nominal aggregate demand into changes in production . (and employment) and changes in prices (inflation or deflation). 
C)  that the same theory that determines what happens in the long run should also be applied to explain fluctuations in the short run. 
D)  the need to understand the velocity of money, the determinants of investment spending, the multiplier, . crowding out, the natural rate of unemployment, the rate of expected inflation, and the Phillips curve. 
A)  the need to understand the determinants of nominal aggregate demand. 
B)  the need to understand the division of changes in nominal aggregate demand into changes in production . (and employment) and changes in prices (inflation or deflation). 
C)  that the same theory that determines what happens in the long run should also be applied to explain fluctuations in the short run. 
D)  the need to understand the velocity of money, the determinants of investment spending, the multiplier, . crowding out, the natural rate of unemployment, the rate of expected inflation, and the Phillips curve.

Question 16

According to real business cycle theorists,

Accepted Answer

A)  production fluctuates because of aggregate demand shocks. 
B)  production fluctuates because of inadequate monetary policy. 
C)  production fluctuates because of the changing value of output and the changing productivity of the economy. 
D)  production fluctuates because of international shocks. 
A)  production fluctuates because of aggregate demand shocks. 
B)  production fluctuates because of inadequate monetary policy. 
C)  production fluctuates because of the changing value of output and the changing productivity of the economy. 
D)  production fluctuates because of international shocks.

Question 17

Real business cycle theorists strongly believe in the classical dichotomy:

Accepted Answer

A)  real fundamentals effectively determine the values of real quantities like GDP even in the short run, and nominal variables (like the money stock) determine the values of nominal quantities (like the price level). 
B)  nominal fundamentals effectively determine the values of nominal quantities like GDP even in the short run, and real variables (like the money stock) determine the values of real quantities (like the price level). 
C)  real fundamentals effectively determine the values of real quantities like (like the price level) even in the short run, and nominal variables (like the money stock) determine the values of nominal quantities (like GDP). 
D)  demand creates its own supply. 
A)  real fundamentals effectively determine the values of real quantities like GDP even in the short run, and nominal variables (like the money stock) determine the values of nominal quantities (like the price level). 
B)  nominal fundamentals effectively determine the values of nominal quantities like GDP even in the short run, and real variables (like the money stock) determine the values of real quantities (like the price level). 
C)  real fundamentals effectively determine the values of real quantities like (like the price level) even in the short run, and nominal variables (like the money stock) determine the values of nominal quantities (like GDP). 
D)  demand creates its own supply.

Question 18

The Milton Friedman - Edmund Phelps analysis of the Phillips curve

Accepted Answer

A)  emphasized that it was fixed and that aggregate demand could be increased without causing the Phillips curve to shift to the right. 
B)  emphasized that an increase in aggregate demand would eventually cause expected inflation to increase, which would shift the Phillips curve to the right. 
C)  emphasized that an increase in aggregate demand would eventually cause expected inflation to increase, which would shift the Phillips curve to the left. 
D)  emphasized that an increase in unemployment would eventually cause expected inflation to increase, which would shift the Phillips curve to the right. 
A)  emphasized that it was fixed and that aggregate demand could be increased without causing the Phillips curve to shift to the right. 
B)  emphasized that an increase in aggregate demand would eventually cause expected inflation to increase, which would shift the Phillips curve to the right. 
C)  emphasized that an increase in aggregate demand would eventually cause expected inflation to increase, which would shift the Phillips curve to the left. 
D)  emphasized that an increase in unemployment would eventually cause expected inflation to increase, which would shift the Phillips curve to the right.

Question 19

Monetary policy could become less powerful in the future for each of the following reasons except

Accepted Answer

A)  deposits at commercial banks become more important in the future. 
B)  deposits at commercial banks decrease in the future. 
C)  people decrease their usage of reserve-backed commercial bank deposits as transactions balances. 
D)  more and more transactions are carried out by credit cards and debit cards. 
A)  deposits at commercial banks become more important in the future. 
B)  deposits at commercial banks decrease in the future. 
C)  people decrease their usage of reserve-backed commercial bank deposits as transactions balances. 
D)  more and more transactions are carried out by credit cards and debit cards.

Question 20

Each of the following would have been found in a macroeconomics textbook in 1960 except

Accepted Answer

A)  a full discussion of expectations. 
B)  the investment function. 
C)  a discussion of the fixed-price short run model. 
D)  a discussion of the multiplier. 
A)  a full discussion of expectations. 
B)  the investment function. 
C)  a discussion of the fixed-price short run model. 
D)  a discussion of the multiplier.

The questions with which Chapter 17 is concerned include each of the following except

According to real business cycle theorists, each of the following is a reason why hours worked would decrease except

Each of the following was part of Milton Friedman's critique of the dominant tradition in macroeconomics in the 1960s except

The part of modern macroeconomics that is in least satisfactory shape

In the standard view, fiscal debts and deficits

According to Ricardian Equivalence

Each of the following is a reason offered by economists to explain why consumers seem unwilling to borrow to maintain consumption spending during a recession except

According to real business cycle theorists, each of the following is a reason why hours worked would increase except

According to real business cycle theorists, each of the following is a reason why hours worked would decrease except

Despite the increased ability of households to borrow

The questions with which Chapter 17 is concerned include each of the following except

Each of the following would have been found in a macroeconomics textbook in 1960 except

According to real business cycle theorists, hours worked will decrease

Real business cycle theorists tend to argue that

Real business cycle theorists believe that the key to understanding business cycles is

According to real business cycle theorists,

Real business cycle theorists strongly believe in the classical dichotomy:

The Milton Friedman - Edmund Phelps analysis of the Phillips curve

Monetary policy could become less powerful in the future for each of the following reasons except

Each of the following would have been found in a macroeconomics textbook in 1960 except

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

Epilogue

Filters

Exam 17: The Future of Macroeconomics

The questions with which Chapter 17 is concerned include each of the following except

According to real business cycle theorists, each of the following is a reason why hours worked would decrease except

Each of the following was part of Milton Friedman's critique of the dominant tradition in macroeconomics in the 1960s except

The part of modern macroeconomics that is in least satisfactory shape

In the standard view, fiscal debts and deficits

According to Ricardian Equivalence

Each of the following is a reason offered by economists to explain why consumers seem unwilling to borrow to maintain consumption spending during a recession except

According to real business cycle theorists, each of the following is a reason why hours worked would increase except

According to real business cycle theorists, each of the following is a reason why hours worked would decrease except

Despite the increased ability of households to borrow

The questions with which Chapter 17 is concerned include each of the following except

Each of the following would have been found in a macroeconomics textbook in 1960 except

According to real business cycle theorists, hours worked will decrease

Real business cycle theorists tend to argue that

Real business cycle theorists believe that the key to understanding business cycles is

According to real business cycle theorists,

Real business cycle theorists strongly believe in the classical dichotomy:

The Milton Friedman - Edmund Phelps analysis of the Phillips curve

Monetary policy could become less powerful in the future for each of the following reasons except

Each of the following would have been found in a macroeconomics textbook in 1960 except

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

Epilogue

Filters