32. The rational expectations hypotheses implies that discretionary macroeconomic policy is:
a. relatively effective in both the short run and long run |
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b. relatively effective in the short run but ineffective in the long run |
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c. relatively ineffective in both the short run and long run |
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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 |
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b. when inflation is steady, actual unemployment will equal the natural rate of unemployment |
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c. systematic demand stimulus policies will be unable to affect prices in the long run |
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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 |
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b. decrease aggregate demand by $500 billion in MPC = 0.8 |
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c. increase aggregate demand by $200 billion if MPC = 0.5 |
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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 |
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b. reduce the future rate of inflation |
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c. stimulate output and employment almost immediately |
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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 |
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b. a higher level of real output |
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c. both a higher price level and a higher level of real output |
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d. a lower price level |
37. When the Fed decreases the money supply, interest rates:
a. rise |
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b. fall |
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c. are unaffected |
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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 |
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b. lower interest rates, increase in aggregate demand, and an expansion in output |
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c. higher interest rates, decrease in aggregate demand, and a reduction in output |
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d. higher interest rates, increase in aggregate demand, and an expansion in output |
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
32. The rational expectations hypotheses implies that discretionary macroeconomic policy is: a. relatively effective in both...
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 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...
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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...
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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...
According to adaptive expectations theory, expansionary monetary and fiscal policies to reduce the unemployment rate are O useless in the long run. O useless in the short run O ineffective on the price level O None of these. QUESTION 4 1 points Save According to the Phillips curve, a more expansionary macro-policy that causes inflation to be greater will: O place downward pressure on prices. O reduce unemployment. O reduce output O reduce the natural rate of unemployment. 1 pointsS...