Question 1

New Keynesian economics assumes rational expectations, flexible wages, and flexible prices.

Accepted Answer

A) True 
 B)False

Question 2

If the stock of money is $60 billion, velocity is 5, and real output is $100 billion, what is the price level?

Accepted Answer

A)  0.12 
B)  1.4 
C)  3 
D)  6 
A)  0.12 
B)  1.4 
C)  3 
D)  6

Question 3

A velocity of 6 means money changes hands, on average, every

Accepted Answer

A)  6 years. 
B)  6 months. 
C)  2 months. 
D)  1/6 of a month. 
A)  6 years. 
B)  6 months. 
C)  2 months. 
D)  1/6 of a month.

Question 4

Refer to the information provided in Figure 17.2 below to answer the questions that follow.   Figure 17.2
-Refer to Figure 17.2. According to Keynes, a(n) ________ will shift AD1 to the right.

Accepted Answer

A)  increase in taxes 
B)  decrease in the money supply 
C)  increase in government spending 
D)  all of the above 
A)  increase in taxes 
B)  decrease in the money supply 
C)  increase in government spending 
D)  all of the above

Question 5

According to the Lucas supply function, ________ no effect on real output.

Accepted Answer

A)  any announced policy change has 
B)  any unanticipated policy change has 
C)  only announced fiscal policy changes have 
D)  only announced monetary policy changes have 
A)  any announced policy change has 
B)  any unanticipated policy change has 
C)  only announced fiscal policy changes have 
D)  only announced monetary policy changes have

Question 6

Refer to Figure 17.3. Suppose the economy is at Point A. According to the rational expectation theory, an unanticipated increase in money supply

Accepted Answer

A)  leaves the economy at Point A. 
B)  moves the economy to Point B. 
C)  moves the economy to Point C. 
D)  moves the economy to Point D. 
A)  leaves the economy at Point A. 
B)  moves the economy to Point B. 
C)  moves the economy to Point C. 
D)  moves the economy to Point D.

Question 7

If all firms behave in a way consistent with having rational expectations, the total amount of labor supplied will be, on average, equal to the total amount of labor demanded.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following schools of economic thought is decidedly opposed to government intervention in the macroeconomy?

Accepted Answer

A)  new classical 
B)  monetarism 
C)  Keynesian 
D)  both A and B 
A)  new classical 
B)  monetarism 
C)  Keynesian 
D)  both A and B

Question 9

Suppose that the stock of money is $150 billion and nominal GDP is $750 billion. The velocity of money is

Accepted Answer

A)  4. 
B)  5. 
C)  16.7. 
D)  600. 
A)  4. 
B)  5. 
C)  16.7. 
D)  600.

Question 10

Refer to the information provided in Figure 17.2 below to answer the questions that follow.   Figure 17.2
-Refer to Figure 17.2. According to the monetarists, ________ can be caused when AD1 shifts to the left.

Accepted Answer

A)  an increase in money demand 
B)  a recession 
C)  inflation 
D)  stagflation 
A)  an increase in money demand 
B)  a recession 
C)  inflation 
D)  stagflation

Question 11

Refer to the information provided in Figure 17.2 below to answer the questions that follow.   Figure 17.2
-Refer to Figure 17.2. According to Keynes, an increase in government spending or an increase in money supply will

Accepted Answer

A)  shift AS1 to the right. 
B)  shift LRAS to the right. 
C)  shift AD1 to the right. 
D)  shift AD1 to the left. 
A)  shift AS1 to the right. 
B)  shift LRAS to the right. 
C)  shift AD1 to the right. 
D)  shift AD1 to the left.

Question 12

If all firms have rational expectations and wages and prices are flexible, there will be

Accepted Answer

A)  high unemployment because firms set their wages above the equilibrium wage rate. 
B)  a shortage of labor because firms set their wage below the equilibrium wage rate. 
C)  no unemployment. 
D)  high unemployment because firms know the "true model." 
A)  high unemployment because firms set their wages above the equilibrium wage rate. 
B)  a shortage of labor because firms set their wage below the equilibrium wage rate. 
C)  no unemployment. 
D)  high unemployment because firms know the "true model."

Question 13

The Lucas supply function, in combination with the assumption that expectations are rational, implies that an announced change in monetary policy affects

Accepted Answer

A)  the actual price level, but not the expected price level. 
B)  neither the actual price level nor the expected price level. 
C)  the expected price level, but not the actual price level. 
D)  both the actual price level and the expected price level. 
A)  the actual price level, but not the expected price level. 
B)  neither the actual price level nor the expected price level. 
C)  the expected price level, but not the actual price level. 
D)  both the actual price level and the expected price level.

Question 14

It is difficult to empirically test alternative macroeconomic models against one another because

Accepted Answer

A)  macroeconomic models do not predict the same outcomes from policies. 
B)  macroeconomic models differ in ways that are hard to standardize for. 
C)  macroeconomic models cannot be expressed in mathematical terms. 
D)  macroeconomic models are always expressed in scientific terms. 
A)  macroeconomic models do not predict the same outcomes from policies. 
B)  macroeconomic models differ in ways that are hard to standardize for. 
C)  macroeconomic models cannot be expressed in mathematical terms. 
D)  macroeconomic models are always expressed in scientific terms.

New Keynesian economics assumes rational expectations, flexible wages, and flexible prices.

If the stock of money is $60 billion, velocity is 5, and real output is $100 billion, what is the price level?

A velocity of 6 means money changes hands, on average, every

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to Keynes, a(n) ________ will shift AD₁ to the right.

According to the Lucas supply function, ________ no effect on real output.

Refer to Figure 17.3. Suppose the economy is at Point A. According to the rational expectation theory, an unanticipated increase in money supply

If all firms behave in a way consistent with having rational expectations, the total amount of labor supplied will be, on average, equal to the total amount of labor demanded.

Which of the following schools of economic thought is decidedly opposed to government intervention in the macroeconomy?

Suppose that the stock of money is $150 billion and nominal GDP is $750 billion. The velocity of money is

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to the monetarists, ________ can be caused when AD₁ shifts to the left.

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to Keynes, an increase in government spending or an increase in money supply will

If all firms have rational expectations and wages and prices are flexible, there will be

The Lucas supply function, in combination with the assumption that expectations are rational, implies that an announced change in monetary policy affects

It is difficult to empirically test alternative macroeconomic models against one another because

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 17: Alternative Views in Macroeconomics

New Keynesian economics assumes rational expectations, flexible wages, and flexible prices.

If the stock of money is $60 billion, velocity is 5, and real output is $100 billion, what is the price level?

A velocity of 6 means money changes hands, on average, every

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to Keynes, a(n) ________ will shift AD1 to the right.

According to the Lucas supply function, ________ no effect on real output.

Refer to Figure 17.3. Suppose the economy is at Point A. According to the rational expectation theory, an unanticipated increase in money supply

If all firms behave in a way consistent with having rational expectations, the total amount of labor supplied will be, on average, equal to the total amount of labor demanded.

Which of the following schools of economic thought is decidedly opposed to government intervention in the macroeconomy?

Suppose that the stock of money is $150 billion and nominal GDP is $750 billion. The velocity of money is

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to the monetarists, ________ can be caused when AD1 shifts to the left.

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to Keynes, an increase in government spending or an increase in money supply will

If all firms have rational expectations and wages and prices are flexible, there will be

The Lucas supply function, in combination with the assumption that expectations are rational, implies that an announced change in monetary policy affects

It is difficult to empirically test alternative macroeconomic models against one another because

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to Keynes, a(n) ________ will shift AD₁ to the right.

Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to the monetarists, ________ can be caused when AD₁ shifts to the left.