Question

32. The rational expectations hypotheses implies that discretionary macroeconomic policy is: a. relatively effective in both...

32. The rational expectations hypotheses implies that discretionary macroeconomic policy is:

a. relatively effective in both the short run and long run

b. relatively effective in the short run but ineffective in the long run

c. relatively ineffective in both the short run and long run

d. effective in the long run since decision makers will continually make predictable, systematic errors

33. The modern view of the Phillips curve suggests that

a. when inflation is less than anticipated, unemployment will fall below the natural rate

b. when inflation is steady, actual unemployment will equal the natural rate of unemployment

c. systematic demand stimulus policies will be unable to affect prices in the long run

d. there will be a trade-off between inflation and unemployment in the long run

34. A $100 billion decrease in government purchases would:

a. increase aggregate demand by $300 billion if MPC = 2/3

b. decrease aggregate demand by $500 billion in MPC = 0.8

c. increase aggregate demand by $200 billion if MPC = 0.5

d. decrease aggregate demand by $400 billion if MPC = 0.4

35. A shift to a more expansionary monetary policy will:

a. increase the long term growth rate of the economy

b. reduce the future rate of inflation

c. stimulate output and employment almost immediately

d. stimulate output and employment, but only after a time lag that is generally long and variable

36. Suppose the economy is in long-run equilibrium at the level of potential output. What will be the long-run effect of an expansionary monetary policy?:

a. a higher price level

b. a higher level of real output  

c. both a higher price level and a higher level of real output

d. a lower price level

37. When the Fed decreases the money supply, interest rates:

a. rise

b. fall

c. are unaffected

d. rise and then fall

38. The short run sequence of events following an unanticipated shift to a more expansionary monetary policy would be

a. lower interest rates, decrease in aggregate demand, and a reduction in output

b. lower interest rates, increase in aggregate demand, and an expansion in output

c. higher interest rates, decrease in aggregate demand, and a reduction in output

d. higher interest rates, increase in aggregate demand, and an expansion in output

0 0
Add a comment Improve this question Transcribed image text
Answer #1

32. Relatively effective in both long and short run

33.when inflation is less anticipated unemployment will fall below natural rate

34. Increase aggregated demand by$200 billion with MPC 0.5

35. Increases the long term growth rate of the economy

37 . Increases

38. Lower interest rates ,increase in aggregate demand and an expansion in output

Add a comment
Know the answer?
Add Answer to:
32. The rational expectations hypotheses implies that discretionary macroeconomic policy is: a. relatively effective in both...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Beginning from a position of long-run equilibrium, an expansionary monetary policy by the Bank of Canada...

    Beginning from a position of long-run equilibrium, an expansionary monetary policy by the Bank of Canada causes A) an increase in the level of potential output B) a fall in the general price level C) an increase in most market interest rates D) aggregate demand for goods and services to exceed potential output E) aggregate demand for goods and services to fall short of potential output

  • Macroeconomic Multiple Choice Questions Answer All 10 Questions* 1) If the Central Bank of Kuwait puts...

    Macroeconomic Multiple Choice Questions Answer All 10 Questions* 1) If the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at full employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is...

  • 1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision...

    1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at ful employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is very low B) the money demand will shift...

  • If a war breaks out in the Middle East causing the oil price to go up,...

    If a war breaks out in the Middle East causing the oil price to go up, then what may happen to the US economy? a. SRAS curve will shift to the left causing output to decrease and the price level to increase b. SRAS curve will shift to the right causing output to increase and the price level to decrease c. AD curve will shift to the right causing the price level to increase d. None of the above Liquidity...

  • An increase in the price level will A) shift the aggregate demand curve to the left.

     7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand curve to the right. C) move the economy up along the aggregate demand curve. D) move the economy down along the aggregate demand curve. 8) Expansionary monetary policy involves A) reducing money supply and lowering taxes B) increasing money supply to decrease interest rate C) increasing government spending and cutting money supply D) increasing the interest rate and increasing taxes 9) Long-run macroeconomic equilibrium occurs when A) aggregate demand...

  • 5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the...

    5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is A) 5 B) 0.5.C)2. D) 0.3. 6) When the GDP in Kuwait rises relative to the GDP in other countries, will fall and will fall A) exports; imports B) exports; net exports C) imports; net exports D) net exports; imports 7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand...

  • Help with graph, fill in the blanks and drop downs.Drop Downs:1. more/less2. higher/lower...

    Help with graph, fill in the blanks and drop downs.Drop Downs:1. more/less2. higher/lower3. (short-run change in output):no change/decrease/increase4. (long-run change in price level):same/lower/higher than/as initial expectations5. (long-run change in output):no change/decrease/increase4. The rational expectations model Suppose the U.S. economy is in equilibrium at a potential output of $10 trillion so that unemployment is at the natural rate. At the beginning of the year, the Federal Reserve announces that its monetary policy will aim to maintain output at potential output and sustain...

  • 15. (4 points) The Taylor Principle states that central banks raise nominal rates by than any...

    15. (4 points) The Taylor Principle states that central banks raise nominal rates by than any rise in expected inflation so that real interest rates when there is a rise in inflation. A) less; rise B) more; fall 9 less; fall D) more; rise 16. (4 points) When the financial crisis started in August 2007, inflation was rising and the Fed began an aggressive easing lowering of the federal funds rate, which indicated that A) there was an upward movement...

  • 4. Problems and Applications Q4Suppose the economy is in a long-run equilibrium, as shown on...

    4. Problems and Applications Q4Suppose the economy is in a long-run equilibrium, as shown on the following graph. Now suppose a fall in government purchases reduces aggregate demand.On the following graph, shift a curve or adjust the point to reflect the short-run effect of reduction in government purchases.True or False: If the Fed undertakes expansionary monetary policy, it can return the economy to its original inflation rate and original unemployment rate. ________ Now, suppose the economy is back in long-run equilibrium, and...

  • 1. If the economy is at full employment, increases in government spending: A) have a multiplier...

    1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT