Question 1

Nearly $2 trillion was added to the national debt between 1983 and 1992.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided in Figure 32.2 below to answer the question(s)  that follow. 1, but does not change the price level. C)  increases the price level above P1, but does not change equilibrium output. D)  increases equilibrium output above Y1 and decreases the price level below P1." class="answers-bank-image d-inline" rel="preload" > Figure 32.2
-Refer to Figure 32.2. According to monetarists, an expansionary fiscal policy in the long run and after all the adjustments have been made

Accepted Answer

A)   does not increase equilibrium output or the price level.
B)   increases equilibrium output above Y1, but does not change the price level.
C)   increases the price level above P1, but does not change equilibrium output.
D)   increases equilibrium output above Y1 and decreases the price level below P1.E) C) and D)
F) B) and D)

Question 3

Traditional treatments of macroeconomic expectations are not consistent with the assumptions of

Accepted Answer

A)   Keynesian policy.
B)   fiscal policy.
C)   microeconomics.
D)   all of the aboveE) A) and D)
F) A) and C)

Question 4

According to monetarists

Accepted Answer

A)   the economy is relatively stable.
B)   economic policy is effective in increasing output.
C)   the economy is very unstable.
D)   government spending is the main source of inflation.E) None of the above
F) A) and D)

Question 5

Reduction of government regulation is a stimulative aggregate supply policy.

Accepted Answer

A) True 
 B)False

Question 6

Monetarists believe

Accepted Answer

A)   the economy is stable.
B)   the economy is rigid.
C)   the economy does not equilibrate quickly.
D)   the economy is unstable.E) A) and D)
F) A) and B)

Question 7

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 haveE) All of the above
F) A) and B)

Question 8

The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public

Accepted Answer

A)   the change in real output will be positive.
B)   the change in real output will be negative.
C)   there will be no change in real output.
D)   Both A and B are possible, depending on they type of monetary policy change that has been announced.E) None of the above
F) B) and D)

Question 9

________ economics includes the idea that labor markets don't always clear due to wage rigidities.

Accepted Answer

A)   Classical
B)   New Classical
C)   Monetarist
D)   KeynesianE) B) and C)
F) All of the above

Question 10

Many economists challenged the idea of activist government intervention in the economy following the

Accepted Answer

A)   inflation of the 1970s and early 1980s.
B)   recession of 1974-1975.
C)   recession of 1980-1982.
D)   all of the above.E) B) and C)
F) A) and B)

Question 11

The Lucas supply function incorporates the idea that output depends on the difference between the actual price level and the expected price level.

Accepted Answer

A) True 
 B)False

Question 12

The rational-expectations hypothesis implies that there is no need for government stabilization policies.

Accepted Answer

A) True 
 B)False

Question 13

Traditional macroeconomic models assume that people's expectations of inflation

Accepted Answer

A)   are determined by looking at all the relevant information and forecasting the future inflation rate.
B)   will be zero in the future.
C)   are set by assuming a continuation of present inflation.
D)   are set by merely guessing what the future inflation rate will be.E) B) and D)
F) B) and C)

Question 14

Fluctuations in velocity tend to increase when measured using M1 instead of M2.

Accepted Answer

A) True 
 B)False

Question 15

The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public, the actual price level

Accepted Answer

A)   will be impacted more than the expected price level.
B)   will be impacted less than the expected price level.
C)   and the expected price level will be impacted in the same way.
D)   will be impacted but the expected price level will not.E) A) and B)
F) A) and C)

Question 16

Related to the Economics in Practice on p. 645: Surveys by the bank of England suggest that two important factors in influencing consumer perceptions of inflation are ________ and ________.

Accepted Answer

A)   the value of the British pound; the value of the euro
B)   food prices; the stock of money
C)   interest rates; the unemployment rate
D)   gas prices; media attention to price increasesE) All of the above
F) None of the above

Question 17

With the Lucas supply function, a price ________ means actual price is either greater than or lower than expected price.

Accepted Answer

A)   floor
B)   ceiling
C)   anomaly
D)   surpriseE) A) and B)
F) A) and C)

Question 18

The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public

Accepted Answer

A)   the price surprise will be positive.
B)   the price surprise will be negative.
C)   there will be no price surprise.
D)   Both A and B are possible, depending on they type of monetary policy change that has been announced.E) All of the above
F) A) and B)

Question 19

The Economic Recovery Tax Act of 1981 ________ in a way that was designed to stimulate capital investment.

Accepted Answer

A)   eliminated personal taxes
B)   cut corporate taxes
C)   increased government spending
D)   all of the aboveE) A) and B)
F) B) and C)

Question 20

Empirical evidence suggests that from 1960 until 2007, the velocity of money had, on average, been

Accepted Answer

A)   constant.
B)   decreasing.
C)   rising.
D)   fluctuating around zero.E) All of the above
F) B) and C)

Exam 32: Alternative Views in Macroeconomics

________ economics includes the idea that labor markets don't always clear due to wage rigidities.

Correct AnswerverifiedShow Answer

Empirical evidence suggests that from 1960 until 2007, the velocity of money had, on average, been

Correct AnswerverifiedShow Answer

Fluctuations in velocity tend to increase when measured using M1 instead of M2.

Correct AnswerverifiedShow Answer

Nearly $2 trillion was added to the national debt between 1983 and 1992.

Correct AnswerverifiedShow Answer

The rational-expectations hypothesis implies that there is no need for government stabilization policies.

Correct AnswerverifiedShow Answer

Many economists challenged the idea of activist government intervention in the economy following the

Correct AnswerverifiedShow Answer

According to monetarists

Correct AnswerverifiedShow Answer

The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public

Correct AnswerverifiedShow Answer

The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public, the actual price level

Correct AnswerverifiedShow Answer

Related to the Economics in Practice on p. 645: Surveys by the bank of England suggest that two important factors in influencing consumer perceptions of inflation are ________ and ________.

Correct AnswerverifiedShow Answer

Reduction of government regulation is a stimulative aggregate supply policy.

Correct AnswerverifiedShow Answer

The Lucas supply function incorporates the idea that output depends on the difference between the actual price level and the expected price level.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Economic Recovery Tax Act of 1981 ________ in a way that was designed to stimulate capital investment.

Correct AnswerverifiedShow Answer

Monetarists believe

Correct AnswerverifiedShow Answer

Traditional treatments of macroeconomic expectations are not consistent with the assumptions of

Correct AnswerverifiedShow Answer

Traditional macroeconomic models assume that people's expectations of inflation

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 32.2 below to answer the question(s) that follow. Figure 32.2 -Refer to Figure 32.2. According to monetarists, an expansionary fiscal policy in the long run and after all the adjustments have been made

Correct AnswerverifiedShow Answer

With the Lucas supply function, a price ________ means actual price is either greater than or lower than expected price.

Correct AnswerverifiedShow Answer

The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Related to the Economics in Practice on p. 645: Surveys by the bank of England suggest that two important factors in influencing consumer perceptions of inflation are and .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified