Question 1

The legislative lag represents

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 2

When the economy suffers a temporary negative supply shock,the central bank's autonomous monetary policy to keep inflation at the target inflation rate leads to

Accepted Answer

A)  more stable economic activities. 
B)  a large deviation of output from its potential. 
C)  divine coincidence. 
D)  both B and C. 
A)  more stable economic activities. 
B)  a large deviation of output from its potential. 
C)  divine coincidence. 
D)  both B and C.

Question 3

When the economy suffers a permanent negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate,then

Accepted Answer

A)  aggregate demand curve shifts leftward. 
B)  output will be unchanged. 
C)  output will be at its potential. 
D)  all of the above. 
E)  both A and C. 
A)  aggregate demand curve shifts leftward. 
B)  output will be unchanged. 
C)  output will be at its potential. 
D)  all of the above. 
E)  both A and C.

Question 4

The time it takes for policy makers to obtain data indicating what is happening in the economy 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.

Question 5

When the economy is hit by a negative demand 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 A and B. 
A)  inflation will be lower. 
B)  output will be at its potential. 
C)  output will be lower. 
D)  inflation will not change. 
E)  both A and B.

Question 6

If aggregate output is below the natural rate level,activists of policies would recommend that the government

Accepted Answer

A)  do nothing. 
B)  try to eliminate the high unemployment by attempting to shift the aggregate supply curve to the right. 
C)  try to eliminate the high unemployment by attempting to shift the aggregate demand curve to the right. 
D)  try to eliminate the high unemployment by attempting to shift the aggregate demand curve to the left. 
A)  do nothing. 
B)  try to eliminate the high unemployment by attempting to shift the aggregate supply curve to the right. 
C)  try to eliminate the high unemployment by attempting to shift the aggregate demand curve to the right. 
D)  try to eliminate the high unemployment by attempting to shift the aggregate demand curve to the left.

Question 7

If workers do not believe that policymakers are serious about fighting inflation,they are most likely to push for higher wages,which will ________ aggregate ________ and lead to unemployment or inflation or both,everything else held constant.

Accepted Answer

A)  decrease; demand 
B)  increase; demand 
C)  decrease; supply 
D)  increase; supply 
A)  decrease; demand 
B)  increase; demand 
C)  decrease; supply 
D)  increase; supply

Question 8

The existence of lags prevents the instantaneous adjustment of the economy to policies changing aggregate demand,thereby strengthening the case for

Accepted Answer

A)  supply-side policy. 
B)  nonactivists. 
C)  activists. 
D)  demand-management policy. 
A)  supply-side policy. 
B)  nonactivists. 
C)  activists. 
D)  demand-management policy.

The legislative lag represents

When the economy suffers a temporary negative supply shock,the central bank's autonomous monetary policy to keep inflation at the target inflation rate leads to

When the economy suffers a permanent negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate,then

The time it takes for policy makers to obtain data indicating what is happening in the economy is called

When the economy is hit by a negative demand shock and the central bank does not respond by changing the autonomous component of monetary policy,then

If aggregate output is below the natural rate level,activists of policies would recommend that the government

If workers do not believe that policymakers are serious about fighting inflation,they are most likely to push for higher wages,which will aggregate and lead to unemployment or inflation or both,everything else held constant.

The existence of lags prevents the instantaneous adjustment of the economy to policies changing aggregate demand,thereby strengthening the case for

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

The legislative lag represents

When the economy suffers a temporary negative supply shock,the central bank's autonomous monetary policy to keep inflation at the target inflation rate leads to

When the economy suffers a permanent negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate,then

The time it takes for policy makers to obtain data indicating what is happening in the economy is called

When the economy is hit by a negative demand shock and the central bank does not respond by changing the autonomous component of monetary policy,then

If aggregate output is below the natural rate level,activists of policies would recommend that the government

If workers do not believe that policymakers are serious about fighting inflation,they are most likely to push for higher wages,which will ________ aggregate ________ and lead to unemployment or inflation or both,everything else held constant.

The existence of lags prevents the instantaneous adjustment of the economy to policies changing aggregate demand,thereby strengthening the case for

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

If workers do not believe that policymakers are serious about fighting inflation,they are most likely to push for higher wages,which will aggregate and lead to unemployment or inflation or both,everything else held constant.