Question 1

An implementation lag is

Accepted Answer

A)  the time it takes to see if that there has been a shock to the economy. 
B)  the time it takes the Fed or Congress to change economic policy. 
C)  the time it takes for a new economic policy to affect behavior in the economy. 
D)  none of the above 
A)  the time it takes to see if that there has been a shock to the economy. 
B)  the time it takes the Fed or Congress to change economic policy. 
C)  the time it takes for a new economic policy to affect behavior in the economy. 
D)  none of the above

Question 2

If the stock market crashes, then the economy will go into a recession.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the information provided in Figure 14.1 below to answer the questions that follow.   Figure 14.1
-Refer to Figure 14.1. If policy makers take an action at time t4, the impact on the economy will not be at time t4 because

Accepted Answer

A)  economic policies are ineffective. 
B)  of the recognition lag. 
C)  of the implementation lag. 
D)  of the response lag. 
A)  economic policies are ineffective. 
B)  of the recognition lag. 
C)  of the implementation lag. 
D)  of the response lag.

Question 4

At the end of 2014, the economy was ________ and the deficit was ________.

Accepted Answer

A)  at full employment; entirely structural 
B)  above full employment; entirely structural 
C)  not quite at full employment; partially cyclical 
D)  well below full employment; entirely cyclical 
A)  at full employment; entirely structural 
B)  above full employment; entirely structural 
C)  not quite at full employment; partially cyclical 
D)  well below full employment; entirely cyclical

Question 5

Refer to the information provided in Figure 14.1 below to answer the questions that follow.   Figure 14.1
-Refer to Figure 14.1. If policy makers decide on a policy at point t3 but it does not affect the economy until period t6, then the policy choice is likely to be

Accepted Answer

A)  inappropriate. 
B)  optimal. 
C)  ineffective. 
D)  none of the above 
A)  inappropriate. 
B)  optimal. 
C)  ineffective. 
D)  none of the above

Question 6

From 1948 to 1980, the S&P 500 stock price index remained relatively stable.

Accepted Answer

A) True 
 B)False

Question 7

A bond holder is part owner of the firm.

Accepted Answer

A) True 
 B)False

Question 8

The multiplier means that the response to fiscal policy is completed immediately.

Accepted Answer

A) True 
 B)False

Question 9

Among the factors that determine the price of a share of stock in a firm is

Accepted Answer

A)  expected dividends. 
B)  the number of workers the firm has. 
C)  the number of years the firm has existed. 
D)  the time to maturity of a bond. 
A)  expected dividends. 
B)  the number of workers the firm has. 
C)  the number of years the firm has existed. 
D)  the time to maturity of a bond.

Question 10

Refer to the information provided in Figure 14.1 below to answer the questions that follow.   Figure 14.1
-Refer to Figure 14.1. If policy makers decide on a policy at point t3 but it does not affect the economy until period t6, then the policy choice is likely to be

Accepted Answer

A)  stabilizing. 
B)  destabilizing. 
C)  optimal. 
D)  automatically stabilizing. 
A)  stabilizing. 
B)  destabilizing. 
C)  optimal. 
D)  automatically stabilizing.

Question 11

The economic impact of automatic stabilizers during ________ periods is to decrease taxes.

Accepted Answer

A)  inflationary 
B)  recessionary 
C)  expansionary 
D)  growth 
A)  inflationary 
B)  recessionary 
C)  expansionary 
D)  growth

Question 12

If the federal government had not bailed out the large financial institutions during the financial crisis of 2008-2009,

Accepted Answer

A)  the rise in overall stock prices would likely have been smaller. 
B)  the rise in overall stock prices would likely have been larger. 
C)  the fall in overall stock prices would likely have been smaller. 
D)  the fall in overall stock prices would likely have been larger. 
A)  the rise in overall stock prices would likely have been smaller. 
B)  the rise in overall stock prices would likely have been larger. 
C)  the fall in overall stock prices would likely have been smaller. 
D)  the fall in overall stock prices would likely have been larger.

Question 13

Without targeting the deficit, which of the following is likely to occur after a negative aggregate demand shock?

Accepted Answer

A)  Y↓ ⇒ T↓ ⇒ deficit↑ ⇒ G↓ ⇒ AD↑ ⇒ Y↑ 
B)  Y↓ ⇒ T↓ ⇒ deficit↑ 
C)  Y↓ ⇒ T↓ ⇒ deficit↑ ⇒ G↓ ⇒ AD↓ ⇒ Y↓ 
D)  Y↓ ⇒ T↓ ⇒ deficit↓ 
A)  Y↓ ⇒ T↓ ⇒ deficit↑ ⇒ G↓ ⇒ AD↑ ⇒ Y↑ 
B)  Y↓ ⇒ T↓ ⇒ deficit↑ 
C)  Y↓ ⇒ T↓ ⇒ deficit↑ ⇒ G↓ ⇒ AD↓ ⇒ Y↓ 
D)  Y↓ ⇒ T↓ ⇒ deficit↓

Question 14

The economic impact of automatic stabilizers during ________ periods is to moderate economic downturns.

Accepted Answer

A)  deflationary 
B)  recessionary 
C)  expansionary 
D)  inflationary 
A)  deflationary 
B)  recessionary 
C)  expansionary 
D)  inflationary

Question 15

The time it takes for a new economic policy to affect behavior in the economy is

Accepted Answer

A)  a recognition lag. 
B)  an implementation lag. 
C)  a response lag. 
D)  none of the above 
A)  a recognition lag. 
B)  an implementation lag. 
C)  a response lag. 
D)  none of the above

Question 16

Between the first quarter of 2000 and the first quarter of 2006, the value of housing wealth decreased by about $600 billion per quarter.

Accepted Answer

A) True 
 B)False

Question 17

Without targeting the deficit, the following is likely to occur after a ________ shock: Y↓ ⇒ T↓ ⇒ deficit↑.

Accepted Answer

A)  positive aggregate demand 
B)  negative aggregate demand 
C)  positive aggregate supply 
D)  negative aggregate supply 
A)  positive aggregate demand 
B)  negative aggregate demand 
C)  positive aggregate supply 
D)  negative aggregate supply

Question 18

You would expect the price of a share of stock to rise if

Accepted Answer

A)  the expected dividend of the stock rose. 
B)  the economy went into recession. 
C)  the price level was declining. 
D)  interest rates rise. 
A)  the expected dividend of the stock rose. 
B)  the economy went into recession. 
C)  the price level was declining. 
D)  interest rates rise.

Question 19

Refer to the information provided in Figure 14.2 below to answer the questions that follow.   Figure 14.2
-Refer to Figure 14.2. If the economy is currently at Point B and policy makers implement a policy which shifts the aggregate demand curve to AD1, the time the economy needs to make the adjustment is known as the

Accepted Answer

A)  implementation lag. 
B)  recognition lag. 
C)  response lag. 
D)  frictional lag. 
A)  implementation lag. 
B)  recognition lag. 
C)  response lag. 
D)  frictional lag.

Question 20

Refer to the information provided in Figure 14.1 below to answer the questions that follow.   Figure 14.1
-Refer to Figure 14.1. If the condition of the economy at point E is realized by policy makers when the economy is at point G, policy is likely to be inappropriate due to

Accepted Answer

A)  crowding out. 
B)  the recognition lag. 
C)  the implementation lag. 
D)  the response lag. 
A)  crowding out. 
B)  the recognition lag. 
C)  the implementation lag. 
D)  the response lag.

An implementation lag is

If the stock market crashes, then the economy will go into a recession.

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers take an action at time t₄, the impact on the economy will not be at time t₄ because

At the end of 2014, the economy was and the deficit was .

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers decide on a policy at point t₃ but it does not affect the economy until period t₆, then the policy choice is likely to be

From 1948 to 1980, the S&P 500 stock price index remained relatively stable.

A bond holder is part owner of the firm.

The multiplier means that the response to fiscal policy is completed immediately.

Among the factors that determine the price of a share of stock in a firm is

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers decide on a policy at point t₃ but it does not affect the economy until period t₆, then the policy choice is likely to be

The economic impact of automatic stabilizers during ________ periods is to decrease taxes.

If the federal government had not bailed out the large financial institutions during the financial crisis of 2008-2009,

Without targeting the deficit, which of the following is likely to occur after a negative aggregate demand shock?

The economic impact of automatic stabilizers during ________ periods is to moderate economic downturns.

The time it takes for a new economic policy to affect behavior in the economy is

Between the first quarter of 2000 and the first quarter of 2006, the value of housing wealth decreased by about $600 billion per quarter.

Without targeting the deficit, the following is likely to occur after a ________ shock: Y↓ ⇒ T↓ ⇒ deficit↑.

You would expect the price of a share of stock to rise if

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If the condition of the economy at point E is realized by policy makers when the economy is at point G, policy is likely to be inappropriate due to

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

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

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 14: Financial Crises, Stabilization, and Deficits

An implementation lag is

If the stock market crashes, then the economy will go into a recession.

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers take an action at time t4, the impact on the economy will not be at time t4 because

At the end of 2014, the economy was ________ and the deficit was ________.

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers decide on a policy at point t3 but it does not affect the economy until period t6, then the policy choice is likely to be

From 1948 to 1980, the S&P 500 stock price index remained relatively stable.

A bond holder is part owner of the firm.

The multiplier means that the response to fiscal policy is completed immediately.

Among the factors that determine the price of a share of stock in a firm is

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers decide on a policy at point t3 but it does not affect the economy until period t6, then the policy choice is likely to be

The economic impact of automatic stabilizers during ________ periods is to decrease taxes.

If the federal government had not bailed out the large financial institutions during the financial crisis of 2008-2009,

Without targeting the deficit, which of the following is likely to occur after a negative aggregate demand shock?

The economic impact of automatic stabilizers during ________ periods is to moderate economic downturns.

The time it takes for a new economic policy to affect behavior in the economy is

Between the first quarter of 2000 and the first quarter of 2006, the value of housing wealth decreased by about $600 billion per quarter.

Without targeting the deficit, the following is likely to occur after a ________ shock: Y↓ ⇒ T↓ ⇒ deficit↑.

You would expect the price of a share of stock to rise if

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If the condition of the economy at point E is realized by policy makers when the economy is at point G, policy is likely to be inappropriate due to

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

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

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 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers take an action at time t₄, the impact on the economy will not be at time t₄ because

At the end of 2014, the economy was and the deficit was .

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers decide on a policy at point t₃ but it does not affect the economy until period t₆, then the policy choice is likely to be

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1. If policy makers decide on a policy at point t₃ but it does not affect the economy until period t₆, then the policy choice is likely to be