Question 1

Unexpected inventory changes, fixed wage contracts, and unexpected changes in the nominal wage rate are associated with a movement along the short-run Phillips curve.

Accepted Answer

A) True 
 B)False

Question 2

If nominal wages are contractually fixed and cannot change in the short run, then an unexpected decline in the inflation rate reduces business revenues and lowers the unemployment rate.

Accepted Answer

A) True 
 B)False

Question 3

Growth in total factor productivity equals the

Accepted Answer

A)   sum of resource growth and economic growth.
B)   ratio of total outputs to total inputs.
C)   ratio of total inputs to total outputs.
D)   percentage change in per capita real GDP.
E)   percentage change in output minus the percentage change in resources.

Question 4

A recessionary real shock is associated with an outward shift of the short-run Phillips curve and a leftward shift of the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 5

Figure 16.1
 
-Refer to Figure 16.1. Following the movement from point A to point B on Phillips curve III, what would cause the Phillips curve to shift so that 5 percent unemployment would be associated with 10 percent inflation?

Accepted Answer

A)   A movement up the aggregate supply curve
B)   A movement down the aggregate supply curve
C)   A movement down the aggregate demand curve
D)   An outward shift of the aggregate supply curve
E)   An inward shift of the aggregate supply curve

Question 6

The change in the money supply equals

Accepted Answer

A)   the government deficit minus government borrowing.
B)   the change in high-powered money plus the change in tax revenues.
C)   government borrowing plus government spending.
D)   the change in excess reserves divided by the deposit expansion multiplier.
E)   the change in the government budget deficit.

Question 7

Because the economy gravitates toward the natural rate of unemployment in the long run, any given short-run Phillips curve is represented on the long-run Phillips curve.

Accepted Answer

A) True 
 B)False

Question 8

If workers realize that an increase in nominal wage rates also constitutes a rise in real wages, then we would expect an increase in employment and an upward movement along the short-run Phillips curve.

Accepted Answer

A) True 
 B)False

Question 9

The short-run effect of unexpected disinflation is rising unemployment.

Accepted Answer

A) True 
 B)False

Question 10

In reality, why don't wages fall during recessions?

Accepted Answer

A)   Wages are sticky downwards.
B)   Worker morale.
C)   Workers need to pay their bills.
D)   The federal government says so.
E)   Some workers will be laid off so that wages do not have to decrease.

Question 11

The oil price shocks of the 1970s demonstrated that business-cycle fluctuations are not solely a function of discretionary government policy.

Accepted Answer

A) True 
 B)False

Question 12

According to the theory of rational expectations, an expected increase in government spending would cause the aggregate supply curve

Accepted Answer

A)   to shift to the left at the same time that the aggregate demand curve shifts to the right.
B)   to shift to the left some time after the aggregate demand curve has shifted to the right.
C)   to shift to the right before the aggregate demand curve shifts to the right.
D)   not to shift at all.
E)   to shift to the right after the aggregate demand curve shifts.

Question 13

An increase in national income shortly before a presidential election could signal the start of

Accepted Answer

A)   an economy-wide supply shock.
B)   a political business cycle.
C)   a real business cycle.
D)   long-term economic growth.
E)   a permanent reduction in the inflation rate.

Question 14

If an increase in inflation is expected, which of the following will occur?

Accepted Answer

A)   Employment will increase.
B)   Aggregate supply will increase.
C)   Employment will decrease.
D)   A worker's reservation wage will rise at the same rate as expected inflation.
E)   Nominal wage rates will remain constant.

Question 15

The long-run growth of the economy depends on productive resources (land, labor, and capital) and technological advances.

Accepted Answer

A) True 
 B)False

Exam 16: Macroeconomic Policy, Business Cycles, and Growth

If nominal wages are contractually fixed and cannot change in the short run, then an unexpected decline in the inflation rate reduces business revenues and lowers the unemployment rate.

Correct Answer
verified

According to the theory of rational expectations, an expected increase in government spending would cause the aggregate supply curve

Correct Answer
verified

A recessionary real shock is associated with an outward shift of the short-run Phillips curve and a leftward shift of the short-run aggregate supply curve.

Correct Answer
verified

Figure 16.1 -Refer to Figure 16.1. Following the movement from point A to point B on Phillips curve III, what would cause the Phillips curve to shift so that 5 percent unemployment would be associated with 10 percent inflation?

Correct Answer
verified

Growth in total factor productivity equals the

Correct Answer
verified

The change in the money supply equals

Correct Answer
verified

If workers realize that an increase in nominal wage rates also constitutes a rise in real wages, then we would expect an increase in employment and an upward movement along the short-run Phillips curve.

Correct Answer
verified

The short-run effect of unexpected disinflation is rising unemployment.

Correct Answer
verified

In reality, why don't wages fall during recessions?

Correct Answer
verified

Because the economy gravitates toward the natural rate of unemployment in the long run, any given short-run Phillips curve is represented on the long-run Phillips curve.

Correct Answer
verified

The oil price shocks of the 1970s demonstrated that business-cycle fluctuations are not solely a function of discretionary government policy.

Correct Answer
verified

The long-run growth of the economy depends on productive resources (land, labor, and capital) and technological advances.

Correct Answer
verified

Unexpected inventory changes, fixed wage contracts, and unexpected changes in the nominal wage rate are associated with a movement along the short-run Phillips curve.

Correct Answer
verified

An increase in national income shortly before a presidential election could signal the start of

Correct Answer
verified

If an increase in inflation is expected, which of the following will occur?

Correct Answer
verified

Exam 16: Macroeconomic Policy, Business Cycles, and Growth

If nominal wages are contractually fixed and cannot change in the short run, then an unexpected decline in the inflation rate reduces business revenues and lowers the unemployment rate.

Correct AnswerverifiedShow Answer

According to the theory of rational expectations, an expected increase in government spending would cause the aggregate supply curve

Correct AnswerverifiedShow Answer

A recessionary real shock is associated with an outward shift of the short-run Phillips curve and a leftward shift of the short-run aggregate supply curve.

Correct AnswerverifiedShow Answer

Figure 16.1 -Refer to Figure 16.1. Following the movement from point A to point B on Phillips curve III, what would cause the Phillips curve to shift so that 5 percent unemployment would be associated with 10 percent inflation?

Correct AnswerverifiedShow Answer

Growth in total factor productivity equals the

Correct AnswerverifiedShow Answer

The change in the money supply equals

Correct AnswerverifiedShow Answer

If workers realize that an increase in nominal wage rates also constitutes a rise in real wages, then we would expect an increase in employment and an upward movement along the short-run Phillips curve.

Correct AnswerverifiedShow Answer

The short-run effect of unexpected disinflation is rising unemployment.

Correct AnswerverifiedShow Answer

In reality, why don't wages fall during recessions?

Correct AnswerverifiedShow Answer

Because the economy gravitates toward the natural rate of unemployment in the long run, any given short-run Phillips curve is represented on the long-run Phillips curve.

Correct AnswerverifiedShow Answer

The oil price shocks of the 1970s demonstrated that business-cycle fluctuations are not solely a function of discretionary government policy.

Correct AnswerverifiedShow Answer

The long-run growth of the economy depends on productive resources (land, labor, and capital) and technological advances.

Correct AnswerverifiedShow Answer

Unexpected inventory changes, fixed wage contracts, and unexpected changes in the nominal wage rate are associated with a movement along the short-run Phillips curve.

Correct AnswerverifiedShow Answer

An increase in national income shortly before a presidential election could signal the start of

Correct AnswerverifiedShow Answer

If an increase in inflation is expected, which of the following will occur?

Correct AnswerverifiedShow Answer

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