Question 1

The smaller the parameter   in the Phillips Curve is

Accepted Answer

A)  the stickier are wages and prices and the more vertical the Phillips Curve is. 
B)  the stickier are wages and prices and the more horizontal the Phillips Curve is. 
C)  the more flexible are wages and prices and the more vertical the Phillips Curve is. 
D)  the more flexible are wages and prices and the more horizontal the Phillips Curve is. 
A)  the stickier are wages and prices and the more vertical the Phillips Curve is. 
B)  the stickier are wages and prices and the more horizontal the Phillips Curve is. 
C)  the more flexible are wages and prices and the more vertical the Phillips Curve is. 
D)  the more flexible are wages and prices and the more horizontal the Phillips Curve is.

Question 2

The Taylor rule is a description of how the central bank's targeted real interest depends on the gap

Accepted Answer

A)  between the current inflation rate and the central bank's targeted inflation rate. 
B)  between the current unemployment rate and the central bank's targeted unemployment rate. 
C)  between the current inflation rate and the central bank's targeted unemployment rate. 
D)  between the current exchange rate and the central bank's targeted exchange rate. 
A)  between the current inflation rate and the central bank's targeted inflation rate. 
B)  between the current unemployment rate and the central bank's targeted unemployment rate. 
C)  between the current inflation rate and the central bank's targeted unemployment rate. 
D)  between the current exchange rate and the central bank's targeted exchange rate.

Question 3

Under conditions of rational expectations of inflation,

Accepted Answer

A)  the only way that government policy can affect the level of unemployment is if the policy is known in advance. 
B)  the only way that government policy can affect the level of unemployment is if the policy comes as a surprise. 
C)  the Phillips curve remains in place and unemployment will change in response to government policy changes. 
D)  the only way that government policy can affect the level of unemployment is if the policy is anticipated by workers, managers, savers, and investors. 
A)  the only way that government policy can affect the level of unemployment is if the policy is known in advance. 
B)  the only way that government policy can affect the level of unemployment is if the policy comes as a surprise. 
C)  the Phillips curve remains in place and unemployment will change in response to government policy changes. 
D)  the only way that government policy can affect the level of unemployment is if the policy is anticipated by workers, managers, savers, and investors.

Question 4

Unemployment cannot be reduced below its natural rate

Accepted Answer

A)  without increasing interest rates. 
B)  without accelerating inflation. 
C)  without increasing government purchases. 
D)  without increasing the exchange rate. 
A)  without increasing interest rates. 
B)  without accelerating inflation. 
C)  without increasing government purchases. 
D)  without increasing the exchange rate.

Question 5

The Phillips curve describes the relationship between

Accepted Answer

A)  employment and potential output. 
B)  the unemployment rate and real GDP. 
C)  the inflation rate and the unemployment rate. 
D)  the interest rate and the exchange rate. 
A)  employment and potential output. 
B)  the unemployment rate and real GDP. 
C)  the inflation rate and the unemployment rate. 
D)  the interest rate and the exchange rate.

Question 6

If

Accepted Answer

A)  6.5%. 
B)  1.5%. 
C)  2.5%. 
D)  -2.5% 
A)  6.5%. 
B)  1.5%. 
C)  2.5%. 
D)  -2.5%

Question 7

The position of the Phillips curve depends on each of the following except

Accepted Answer

A)  the natural rate of unemployment. 
B)  the expected rate of inflation. 
C)  the actual rate of inflation. 
D)  whether there are any current supply shocks affecting inflation. 
A)  the natural rate of unemployment. 
B)  the expected rate of inflation. 
C)  the actual rate of inflation. 
D)  whether there are any current supply shocks affecting inflation.

Question 8

Under conditions of rational expectations of inflation,

Accepted Answer

A)  the Phillips curve will eventually shift to the right if the economy is expending and inflation is increasing. 
B)  the Phillips curve will shift to the left if the economy is expanding and inflation is increasing. 
C)  the Phillips curve will remain in place and unemployment will decrease if the economy is expanding
And inflation is increasing. 
D)  the Phillips curve will shift as rapidly as, or faster than, changes in economic policy that affect the level of aggregate demand. 
A)  the Phillips curve will eventually shift to the right if the economy is expending and inflation is increasing. 
B)  the Phillips curve will shift to the left if the economy is expanding and inflation is increasing. 
C)  the Phillips curve will remain in place and unemployment will decrease if the economy is expanding
And inflation is increasing. 
D)  the Phillips curve will shift as rapidly as, or faster than, changes in economic policy that affect the level of aggregate demand.

Question 9

A favorable supply shock will

Accepted Answer

A)  result in a decrease in the inflation rate along the Phillips curve. 
B)  shift the Phillips curve to the right. 
C)  shift the Phillips curve to the left. 
D)  result in an increase in the inflation rate along the Phillips curve. 
A)  result in a decrease in the inflation rate along the Phillips curve. 
B)  shift the Phillips curve to the right. 
C)  shift the Phillips curve to the left. 
D)  result in an increase in the inflation rate along the Phillips curve.

Question 10

If inflation is low and stable,

Accepted Answer

A)  inflation expectations are probably rational. 
B)  inflation expectations are probably static. 
C)  inflation expectations are probably adaptive. 
D)  inflation expectations are probably dynamic. 
A)  inflation expectations are probably rational. 
B)  inflation expectations are probably static. 
C)  inflation expectations are probably adaptive. 
D)  inflation expectations are probably dynamic.

Question 11

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

Accepted Answer

A)  the natural rate of unemployment. 
B)  the natural rate of inflation. 
C)  whether there are any supply shocks affecting inflation. 
D)  the slope of the monetary policy reaction function. 
A)  the natural rate of unemployment. 
B)  the natural rate of inflation. 
C)  whether there are any supply shocks affecting inflation. 
D)  the slope of the monetary policy reaction function.

Question 12

The questions with which Chapter 12 is concerned include each of the following except

Accepted Answer

A)  what is the IS curve? 
B)  how do we connect the sticky-price model with the flexible price model? 
C)  what is the natural rate of unemployment? What determines its value 
D)  how has the expected rate of inflation changed in the United States over the past couple of generations?? 
A)  what is the IS curve? 
B)  how do we connect the sticky-price model with the flexible price model? 
C)  what is the natural rate of unemployment? What determines its value 
D)  how has the expected rate of inflation changed in the United States over the past couple of generations??

Question 13

The questions with which Chapter 12 is concerned include each of the following except

Accepted Answer

A)  what can shift the Phillips curve? 
B)  how has the natural rate of unemployment changed in the United States over the past couple of generations? 
C)  what determines the Fiscal Policy Reaction Function, and what determines its slope? 
D)  what does it mean for expectations of inflation to be static? Adaptive? Rational? 
A)  what can shift the Phillips curve? 
B)  how has the natural rate of unemployment changed in the United States over the past couple of generations? 
C)  what determines the Fiscal Policy Reaction Function, and what determines its slope? 
D)  what does it mean for expectations of inflation to be static? Adaptive? Rational?

Question 14

The monetary policy reaction function is

Accepted Answer

A)  an upward-sloping relationship between the inflation rate and the money supply growth rate. 
B)  a downward-sloping relationship between the inflation rate and the unemployment rate. 
C)  a downward-sloping relationship between the inflation rate and the total output growth rate. 
D)  an upward-sloping relationship between the inflation rate and the unemployment rate. 
A)  an upward-sloping relationship between the inflation rate and the money supply growth rate. 
B)  a downward-sloping relationship between the inflation rate and the unemployment rate. 
C)  a downward-sloping relationship between the inflation rate and the total output growth rate. 
D)  an upward-sloping relationship between the inflation rate and the unemployment rate.

Question 15

Adaptive expectations of inflation prevail when people

Accepted Answer

A)  ignore the fact that inflation can change. 
B)  assume that future inflation will be like recent past inflation. 
C)  assume that inflation will adapt to current conditions. 
D)  use all the information they have as best they can. 
A)  ignore the fact that inflation can change. 
B)  assume that future inflation will be like recent past inflation. 
C)  assume that inflation will adapt to current conditions. 
D)  use all the information they have as best they can.

Question 16

The parameter rr in the Taylor rule equation tells how much the central bank changes

Accepted Answer

A)  the money supply in reaction to a gap between the actual and target inflation rates. 
B)  the exchange rate in reaction to a gap between the actual and target inflation rates. 
C)  the real interest rate in reaction to a gap between the actual and target inflation rates. 
D)  the unemployment rate in reaction to a gap between the actual and target inflation rates. 
A)  the money supply in reaction to a gap between the actual and target inflation rates. 
B)  the exchange rate in reaction to a gap between the actual and target inflation rates. 
C)  the real interest rate in reaction to a gap between the actual and target inflation rates. 
D)  the unemployment rate in reaction to a gap between the actual and target inflation rates.

Question 17

The reason that expansionary policy cannot reduce unemployment when inflation expectations are rational is that

Accepted Answer

A)  the Phillips curve shifts far enough to the right to completely offset the unemployment effect of the leftward shift of the monetary policy reaction function. 
B)  the monetary policy reaction function does not shift to the left if inflation expectations are rational. 
C)  the Phillips curve shifts far enough to the left to completely offset the unemployment effect of the . rightward shift of the monetary policy reaction function. 
D)  the LM curve shifts far enough to the right to offset the effect of the leftward shift of the IS curve. 
A)  the Phillips curve shifts far enough to the right to completely offset the unemployment effect of the leftward shift of the monetary policy reaction function. 
B)  the monetary policy reaction function does not shift to the left if inflation expectations are rational. 
C)  the Phillips curve shifts far enough to the left to completely offset the unemployment effect of the . rightward shift of the monetary policy reaction function. 
D)  the LM curve shifts far enough to the right to offset the effect of the leftward shift of the IS curve.

Question 18

Static expectations of inflation prevail when people

Accepted Answer

A)  ignore the fact that inflation can change. 
B)  assume that future inflation will be like recent past inflation. 
C)  get really charged about inflation. 
D)  use all the information they have as best they can. 
A)  ignore the fact that inflation can change. 
B)  assume that future inflation will be like recent past inflation. 
C)  get really charged about inflation. 
D)  use all the information they have as best they can.

Question 19

The less sticky are wages and prices

Accepted Answer

A)  the more vertical will be the Phillips curve. 
B)  the more vertical will be the IS curve. 
C)  the more horizontal will be the LM curve. 
D)  the more horizontal will be the Phillips curve. 
A)  the more vertical will be the Phillips curve. 
B)  the more vertical will be the IS curve. 
C)  the more horizontal will be the LM curve. 
D)  the more horizontal will be the Phillips curve.

Question 20

The slope of the Phillips curve depends on

Accepted Answer

A)  how sticky interest rates are. 
B)  how sticky the exchange rate is. 
C)  how sticky wages and prices are. 
D)  how sticky the inflation rate is. 
A)  how sticky interest rates are. 
B)  how sticky the exchange rate is. 
C)  how sticky wages and prices are. 
D)  how sticky the inflation rate is.

The smaller the parameter in the Phillips Curve is

The Taylor rule is a description of how the central bank's targeted real interest depends on the gap

Under conditions of rational expectations of inflation,

Unemployment cannot be reduced below its natural rate

The Phillips curve describes the relationship between

If

The position of the Phillips curve depends on each of the following except

Under conditions of rational expectations of inflation,

A favorable supply shock will

If inflation is low and stable,

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

The questions with which Chapter 12 is concerned include each of the following except

The questions with which Chapter 12 is concerned include each of the following except

The monetary policy reaction function is

Adaptive expectations of inflation prevail when people

The parameter r_r in the Taylor rule equation tells how much the central bank changes

The reason that expansionary policy cannot reduce unemployment when inflation expectations are rational is that

Static expectations of inflation prevail when people

The less sticky are wages and prices

The slope of the Phillips curve depends on

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

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

Exam 12: The Phillips Curve, Expectations, and Monetary Policy

The smaller the parameter in the Phillips Curve is

The Taylor rule is a description of how the central bank's targeted real interest depends on the gap

Under conditions of rational expectations of inflation,

Unemployment cannot be reduced below its natural rate

The Phillips curve describes the relationship between

If

The position of the Phillips curve depends on each of the following except

Under conditions of rational expectations of inflation,

A favorable supply shock will

If inflation is low and stable,

Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except

The questions with which Chapter 12 is concerned include each of the following except

The questions with which Chapter 12 is concerned include each of the following except

The monetary policy reaction function is

Adaptive expectations of inflation prevail when people

The parameter rr in the Taylor rule equation tells how much the central bank changes

The reason that expansionary policy cannot reduce unemployment when inflation expectations are rational is that

Static expectations of inflation prevail when people

The less sticky are wages and prices

The slope of the Phillips curve depends on

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

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

The parameter r_r in the Taylor rule equation tells how much the central bank changes