Flashcards About assignment 11
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A rational expectation is A) the forecast that automatically carries over from past forecasts. B) a forecast devoid of all emotions. C) a forecast which perfectly foretells the future. D) the best possible forecast based upon all relevant information.
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D
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The forces that generate economic growth are those that shift the A) long-run aggregate supply curve rightward. B) long-run aggregate supply curve leftward. C) aggregate demand curve leftward. D) None of the above answers are correct.
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A
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Suppose the growth rate of the quantity of money increased from 5 percent per year to 8 percent per year. According to the ________, this event would trigger a business cycle expansion. A) monetarist cycle model B) aggregate supply cycle model C) Keynesian cycle model D) real business cycle model
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A
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The Phillips curve shows the relationship between the A) nominal interest rate and the real interest rate. B) real interest rate and the unemployment rate. C) expected rate of inflation and the nominal interest rate. D) unemployment rate and the inflation rate.
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D
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Demand-pull inflation persists because of A) continuing increases in aggregate supply. B) continuing increases in the quantity of money. C) continuing increases in government expenditures. D) continuing increases in real wage rates.
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B
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In the above figure, suppose that the economy currently is at point A. If the inflation rate rises and this rise is NOT anticipated by the public, the economy moves to a point such as point A) C. B) B. C) D. D) E.
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B
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The long-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the
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D
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The long-run Phillips curve A) is horizontal. B) is vertical. C) slopes downward. D) slopes upward.
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B
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Moving along the short-run Phillips curve indicates A) that higher unemployment leads to a higher inflation rate. B) a natural rate of unemployment that does not vary with inflation. C) a tradeoff between inflation and unemployment so that higher inflation is related to lower unemployment. D) that higher inflation leads to a higher unemployment rate.
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C
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In a demand-pull inflation, the AD ( steps A to B) curve shifts ________ and the SRAS (or SAS) curve shifts ________ (steps B to C). A) rightward; rightward B) leftward; leftward C) rightward; leftward D) leftward; rightward
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C
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A key element of the new classical model of the business cycle is A) rational expectations. B) random fluctuations in technology. C) sticky prices. D) a horizontal SAS curve.
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A
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New Keynesian economists believe that ________ is influenced by ________. A) today?s money wage rate; yesterday?s rational expectations of the price level B) yesterday?s rational expectations of the price level; today?s money wage rate C) yesterday?s money wage rate ; today?s rational expectations of the money wage D) today?s money wage rate; today?s rational expectations of the price level
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A
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The ________ cycle theory states that only unexpected fluctuations in aggregate demand are the main source of business cycles. A) monetarist B) Keynesian C) new Keynesian D) new classical
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D
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Which theory emphasizes frequent changes in investment because of ?animal spirits? as the main source of economic fluctuations? A) Keynesian cycle theory B) new classical cycle theory C) monetarist cycle theory D) real business cycle theory
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A
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In monetarist business cycle theory, the factor leading to a business cycle is changes in A) the growth rate of the quantity of money. B) net exports. C) investment spending. D) consumer spending.
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A
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Critics of the real business cycle model argue that A) investment spending is strongly related to the real interest rate. B) investment spending is only weakly related to the real interest rate. C) labor supply is only weakly related to the real interest rate. D) labor supply is very strongly related to the real interest rate.
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C
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In the real business cycle model, the quantity of money A) can decrease the effect from technology shocks. B) has no effect on real GDP. C) can change the real wage rate. D) can increase the real interest rate.
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B
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Whenever the federal government spends more than it receives in tax revenue, then by definition it A) operates a balanced budget. B) runs a budget deficit. C) runs a budget surplus. D) increases economic growth.
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B
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If we compare the United States to France, the U.S. tax wedge is ________ the French tax wedge. A) smaller than B) larger than C) not comparable to D) equals to
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A
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I equals A) S + T + G. B) S + (T - G) + (M-X) C) C + T + G + (M-X). D) C + S + T.
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B
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The idea that a government budget deficit decreases investment is called A) the capital investment effect. B) the crowding-out effect. C) government dissaving. D) the Ricardo-Barro effect.
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B
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Comparing the fiscal imbalance for the current generation versus future generations, it is the case that A) future generations pay a larger share of the fiscal imbalance. B) the current generation pays a larger share of the fiscal imbalance. C) each generation pays all of its fiscal imbalance. D) each generation pays half of the fiscal imbalance.
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A
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In order for the United States to repay its international debt, the United States would need to A) have a surplus of imports over exports. B) cut taxes. C) have a current account deficit. D) have a surplus of exports over imports.
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D
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Automatic stabilizers A) require an act of Congress. B) are caused by a change in government expenditures. C) are triggered by the business cycle. D) are caused by changes in personal tax rates.
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C
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The structural deficit is the deficit A) that would occur at full employment. B) during a recession. C) during an expansion. D) caused by the business cycle.
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A
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The difference between automatic stablizers (automatic fiscal policy) and discretionary fiscal policy is that A) Congress initiates automatic fiscal policy. B) the President initiates discretionary fiscal policy. C) the President has nothing to do with discretionary fiscal policy. D) Congress must pass laws implementing discretionary fiscal policy.
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D
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Real business cycle theory says that the factor leading to the business cycle is changes in A) productivity. B) only aggregate demand. C) animal spirits. D) the growth rate of the quantity of money.
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A
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An increase in the natural unemployment rate shifts A) both the short-run and the long-run Phillips curves rightward. B) the short-run but not the long-run Phillips curve rightward. C) neither the short-run nor the long-run Phillips curve. D) the long-run but not the short -run Phillips curve rightward.
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A
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According to the ________ theory, technological change can be so rapid that some existing capital becomes obsolete and ________. A) real business cycle; productivity falls B) new classical; aggregate demand increases C) real business cycle; aggregate demand increases D) new classical; productivity falls
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A
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If the government?s budget is in surplus even when the economy is at full employment, the surplus is said to be A) cyclical. B) discretionary. C) persisting. D) structural.
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D
