Questions:
Question 1
Other things the same, an increase in the money supply cause the interest rate to rise to balance money supply and money demand.
Question 2
According to Friedman and Phelps it is appropriate to view the Phillips curve as a menu of options available to policymakers.
Question 3
Purchasing-power parity means that the prices of goods in terms of local currencies must be the same across countries.
Question 4
During recessions
Question 5
Which of the following decreases the natural rate of unemployment?
Question 6
As the price level rises, the value of money rises.
Question 7
If the U.S. inflation rate is positive and higher than the inflation rate in Australia over the next few years then
Question 8
If Americans decided to save a larger fraction of their income, the interest rate would fall and the dollar would depreciate.
Question 9
As inflation rises, people choose to hold less money. The resources used to reduce money holdings are called shoe leather costs.
Question 10
If firms and businesses became more optimistic about the future, what would happen to prices and output in the short run?
Question 11
The demand curve for dollars in the market for foreign-currency exchange is based on the logic that a decrease in the exchange rate makes
Question 12
Under the assumptions of quantity theory, if the money supply increases by 3 percentage points which of the following increases by 3 percentage points?
Question 13
Suppose the price of the product you sell stays the same, but the prices of other goods and services rise, this means that the
Question 14
In the United States during the 1970's, expected inflation rose substantially. This rise was due entirely to a supply shock not to higher money supply growth.
Question 15
Other things the same, if the U.S. dollar appreciates, then U.S. goods become
Question 16
The long-run Phillips curve implies that monetary policy influences nominal but not real variables.
Question 17
According to the economist's definition, money includes only the few types of wealth that are regularly accepted by sellers in exchange for goods and services.
Question 18
According to the long-run Phillips curve what are the long-run effects of an increase in the money supply growth rate?
Question 19
If the U.S. were to impose an import quota on CD players
Question 20
When the Fed announces a target for the federal funds rate it essentially accommodates the day-to-day shifts in money demand by adjusting the money supply accordingly.
Question 21
The recession of 2008-2009 was associated with a decrease in aggregate demand.
Question 22
National saving is the source of the supply of loanable funds in the open-economy macroeconomic model.
Question 23
The Fed's primary tool to change the money supply is open-market operations, the buying and selling of bonds.
Question 24
If some firms have sticky prices, and the price level raises more than had been anticipated, then in the short run those firms with sticky prices will have
Question 25
Classical theory points to money supply growth as the primary determinant of
Question 26
Money that has value as a good is called fiat money.
Question 27
If the U.S. put an import quota on refrigerators, it would
Question 28
Which of the following best illustrates money's use as a unit of account?
Question 29
A mutual fund in China buys $100,000 of bonds sold by a U.S. corporation. This is an example of
Question 30
If aggregate demand shifts right farther than expected, then
Question 31
Which of the following is included in M2 but not M1?
Question 32
An increase in the interest rate increases the opportunity cost of holding money, so the quantity of money demanded falls.
Question 33
Which of the following Fed actions both increase the money supply?
Question 34
If the government of a foreign country chooses to purchase large quantities of U.S. assets, which of the following happens?
Question 35
According to rational expectations if the government made a credible commitment to a policy of low inflation, people would be rational enough to lower their expectations of inflation immediately. The short run Phillips curve would shift downward and the economy would reach low inflation quickly.
Question 36
Net capital outflow equals net exports.
Question 37
If consumers and businesses became more pessimistic about the future of the economy, the government could try to stabilize output by
Selected Answer:
decreasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.
Answers: decreasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.
decreasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.
increasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.
increasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.
Response Feedback:
See section: Using Policy to Stabilize the Economy. If consumers and businesses become pessimistic the aggregate demand curve shifts to the left. An increase in government expenditures shifts the aggregate demand curve to the right. While in theory this should stabilize the economy it may take a long time to enact policy. Because of the political process the lag in implementing fiscal policy can be long. By the time the change in fiscal policy is passed and ready to implement, the condition of the economy may well have changed.
Question 38
During the financial crisis and recession of 2008-2009
Question 39
Net capital outflow is determined by
Question 40
A U.S. retail store uses dollars to purchase Yuan (Chinese currency) it then uses all of these Yuan to buy toys from a Chinese firm. Overall these transactions have
Question 41
An open economy can only finance its investment purchases with domestic saving.
Question 42
At a price level below equilibrium people want to hold
Question 43
Which of the following both decrease the money supply?
Question 44
Other things the same, an increase in the price level shifts money demand
Question 45
If the short-run aggregate supply curve were to shift left, prices and output would fall.
Question 46
Short-run fluctuations in output and the price level should be viewed as deviations from the continuing long-run trends of output growth and inflation.
Question 47
In the market for foreign currency-exchange an increase in the demand for dollars would cause the real exchange rate to fall.
Question 48
Nearly all hyperinflations follow the same pattern: high government spending is financed by increases in the money supply.
Question 49
How many members of the Board of Governors are voting member of the FOMC?
Question 50
In 2008 the U.S. budget deficit increased. According to the open-economy macroeconomic model