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50$ 50 questions similar to the one below . Need Econ expert only

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Question 1

/ 2 pts

Menu costs of inflation are costs arising from<br>

Menu costs of inflation are costs arising from

the failure to fully index the tax system for inflation.

 
 
 
Correct!

the need for firms to change prices during times of inflation.

 
 
 

attempts by households and firms to avoid paying an inflation tax on money balances.

 
 
 

high nominal interest rates.

 
 
 
 
 
 

Question 2

/ 2 pts

Expansionary shifts of the aggregate demand curve<br>

Expansionary shifts of the aggregate demand curve
Correct!

can originate in either the assets market or the goods market.

 
 
 

cannot originate in either the assets market or the goods market.

 
 
 

can originate in the goods market, but not the assets market.

 
 
 

can originate in the assets market, but not the goods market.

 
 
 
 
 
 

Question 3

/ 2 pts

Despite its costs, governments typically resist eliminating inflation because<br>

Despite its costs, governments typically resist eliminating inflation because

the increase in menu costs because of inflation increases the governments’ tax revenues.

 
 
 
Correct!

doing so would result in lost output and jobs when the economy is near full employment.

 
 
 

governments lack the knowledge of how to eliminate inflation.

 
 
 

as net lenders, governments benefit from inflation.

 
 
 
 
 
 

Question 4

/ 2 pts

According to new Keynesians, which of the following is NOT an important source of price stickiness?<br>

According to new Keynesians, which of the following is NOT an important source of price stickiness?

Long-term nominal wage contracts

 
 
 
You Answered

Imperfect competition among sellers in the goods market

 
 
 

Long-term nominal price contracts

 
 
 
Correct Answer

Government wage and price controls

 
 
 
 
 
 

Question 5

/ 2 pts

In the quantity theory of money demand,<br>

In the quantity theory of money demand,

the demand for real balances is determined by the price level.

 
 
 
You Answered

velocity is assumed to vary with the price level.

 
 
 

the price level is assumed to be constant.

 
 
 
Correct Answer

velocity is assumed to be constant.

 
 
 
 
 
 

Question 6

/ 2 pts

Which of the following best describes a price taker?<br>

Which of the following best describes a price taker?

Firms taking the aggregate price level as given

 
 
 

Prices being set by long-term contracts

 
 
 

Price strategies found in monopolistically competitive markets

 
 
 
Correct!

A firm taking the market price as given

 
 
 
 
 
 

Question 7

/ 2 pts

Milton Friedman and Anna Schwartz found in their study of money and business cycles from the Civil War to 1960 that<br>

Milton Friedman and Anna Schwartz found in their study of money and business cycles from the Civil War to 1960 that

there is no consistent relationship between money and output over the business cycle.

 
 
 

the growth rate of the money supply rises before output declines in every business cycle.

 
 
 

the growth rate of the money supply falls before output declines during some business cycles and rises before output declines during other business cycles.
 
 
Correct!

the growth rate of the money supply falls before output declines in every business cycle.

 
 
 
 
 
 

Question 8

/ 2 pts

Demand-pull inflation results from<br>

Demand-pull inflation results from
Correct!

policymakers’ attempts to increase aggregate demand for current output above the full-employment level.

 
 
 

attempts by financial markets to deal with bracket creep.

 
 
 

attempts by the public to receive higher after-tax returns on their savings.

 
 
 

workers’ pressure for higher wages.

 
 
 
 
 
 

Question 9

/ 2 pts

Attempts by policymakers to keep the rate of unemployment below the natural rate of unemployment for a sustained period of time will result in<br>

Attempts by policymakers to keep the rate of unemployment below the natural rate of unemployment for a sustained period of time will result in

a recession.

 
 
 
Correct Answer

demand-pull inflation.

 
 
 

a shift of the LRAS curve to the left.
 
 
You Answered

permanently higher levels of output.

 
 
 
 
 
 

Question 10

/ 2 pts

The Federal Reserve pursued an expansionary monetary policy during 1964 in order to<br>

The Federal Reserve pursued an expansionary monetary policy during 1964 in order to

counteract the effects of a deep cut in federal income taxes.

 
 
 
Correct Answer

keep interest rates from rising.

 
 
 
You Answered

pull the United States out of a deep recession.

 
 
 

bring down the inflation rate.

 
 
 
 
 
 

Question 11

/ 2 pts

According to the Ricardian equivalence proposition,<br>

According to the Ricardian equivalence proposition,

a decline in the demand for money results in an equivalent increase in the demand for nonmoney assets.

 
 
 

saving equals investment only at full employment.

 
 
 
Correct!

the increase in current income from a tax cut is offset by higher taxes in the future to pay off the debt.

 
 
 

government spending is the equivalent of investment spending.

 
 
 
 
 
 

Question 12

/ 2 pts

New Keynesian and new classical economists agree that<br>

New Keynesian and new classical economists agree that

production beyond the full-employment level of output is impossible, even in the short run.

 
 
 

the LRAS curve slopes up.
 
 

in the long run the inflation rate must be zero.

 
 
 
Correct!

policymakers cannot permanently maintain the unemployment rate below the natural rate.

 
 
 
 
 
 

Question 13

/ 2 pts

Long-term inflation is principally<br>

Long-term inflation is principally
You Answered

the result of chronic federal budget deficits.

 
 
 
Correct Answer

a monetary phenomenon.

 
 
 

the result of the slowdown in the growth rate of aggregate supply since 1973.

 
 
 

caused by excess wage demands by unionized workers.

 
 
 
 
 
 

Question 14

/ 2 pts

Real business cycle analysis differs from both the new classical and the new Keynesian analyses in holding that<br>

Real business cycle analysis differs from both the new classical and the new Keynesian analyses in holding that

changes in aggregate demand can affect output in the long run.

 
 
 

money is neutral in the long run, but not in the short run.

 
 
 
Correct!

the aggregate supply curve is vertical even in the short run.

 
 
 

prices are sticky in the short run.

 
 
 
 
 
 

Question 15

/ 2 pts

A decrease in the willingness or ability of banks to lend has a significant impact on the economy because<br>

A decrease in the willingness or ability of banks to lend has a significant impact on the economy because
Correct Answer

some borrowers from banks are unable to borrow from nonmoney markets.

 
 
 
You Answered

it causes the short-run aggregate supply curve to shift to the left.

 
 
 

bank profits decline and employment in the banking sector contracts.

 
 
 

it causes the short-run aggregate supply curve to shift to the right.

 
 
 
 
 
 

Question 16

/ 2 pts

Which of the following central banks continues to emphasize the growth of the money supply in its conduct of monetary policy?<br>

Which of the following central banks continues to emphasize the growth of the money supply in its conduct of monetary policy?
You Answered

The Fed

 
 
 
Correct Answer

ECB

 
 
 

Neither the Fed nor the ECB

 
 
 

Both the Fed and ECB

 
 
 
 
 
 

Question 17

/ 2 pts

An increase in oil prices will shift the short-run aggregate supply curve<br>

An increase in oil prices will shift the short-run aggregate supply curve

down and to the right, causing the level of current output to fall.

 
 
 

up and to the left, causing the level of current output to rise.

 
 
 
Correct!

up and to the left, causing the level of current output to fall.

 
 
 

down and to the right, causing the level of current output to rise.

 
 
 
 
 
 

Question 18

/ 2 pts

Which of the following will NOT shift the short-run aggregate supply function?<br>

Which of the following will NOT shift the short-run aggregate supply function?
You Answered

Changes in the expected price level

 
 
 
Correct Answer

Changes in the price level

 
 
 

Changes in labor costs

 
 
 

Changes in the costs of nonlabor inputs

 
 
 
 
 
 

Question 19

/ 2 pts

The liquidity preference theory emphasizes<br>

The liquidity preference theory emphasizes

the effect of price level changes on the demand for real balances.

 
 
 
Correct!

the sensitivity of money demand to changes in interest rates.

 
 
 

the transactions motive for holding money.

 
 
 

the precautionary motive for holding money.

 
 
 
 
 
 

Question 20

/ 2 pts

Which of the following is a likely causative factor in the movement of <i>M1</i> velocity during the 1980s?<br>

Which of the following is a likely causative factor in the movement of M1 velocity during the 1980s?
Correct Answer

Movements in interest rates

 
 
 
You Answered

Exchange rate fluctuations

 
 
 

Changes in marginal tax rates

 
 
 

Political instability in Eastern Europe

 
 
 
 
 
 

Question 21

/ 2 pts

According to Keynes, if the interest rate on bond falls, but aggregate income doesn’t change,<br>

According to Keynes, if the interest rate on bond falls, but aggregate income doesn’t change,

the price level will decrease.

 
 
 
Correct!

velocity will decrease.

 
 
 

velocity will increase.

 
 
 

the demand for money will decrease.

 
 
 
 
 
 

Question 22

/ 2 pts

The existence of cost of living adjustments in many wage contracts<br>

The existence of cost of living adjustments in many wage contracts

is being phased out under recent federal legislation.

 
 
 
You Answered

assures that these wages fully adjust to aggregate nominal disturbances.

 
 
 

results in these wages being completely rigid.

 
 
 
Correct Answer

does not result in these wages fully adjusting to aggregate nominal disturbances.

 
 
 
 
 
 

Question 23

/ 2 pts

According to the new Keynesian view, upturns and downturns in economic activity<br>

According to the new Keynesian view, upturns and downturns in economic activity
You Answered

are always the result of unexpected changes in the money supply.

 
 
 

cannot be offset by stabilization policy.

 
 
 
Correct Answer

may represent times when the economy is not at its long-run equilibrium.

 
 
 

are unrelated to movements in aggregate demand.

 
 
 
 
 
 

Question 24

/ 2 pts

A disinflation policy that lacks credibility<br>

A disinflation policy that lacks credibility
Correct!

will increase the lost output and jobs that result from the policy.

 
 
 

will have no effect on inflation.

 
 
 

will work only if the economy is experiencing a hyperinflation.

 
 
 

results in a leftward shift of the AD curve.
 
 
 
 
 

Question 25

/ 2 pts

If during a particular year, the money supply grows 7%, output grows 2%, and velocity falls 2%, the inflation rate will be<br>

If during a particular year, the money supply grows 7%, output grows 2%, and velocity falls 2%, the inflation rate will be
Correct Answer

3%.

 
 
 

11%.

 
 
 

7%.

 
 
 
You Answered

9%.

 
 
 
 
 
 

Question 26

/ 2 pts

Which events made the inflation that began in the late 1960s worse?<br>

Which events made the inflation that began in the late 1960s worse?
Correct!

The oil supply shocks of the mid-1970s

 
 
 

The large increases in the exchange value of the dollar in the early 1970s

 
 
 

The large tax cuts of the early 1970s

 
 
 

The large reductions in the government spending in the late 1970s

 
 
 
 
 
 

Question 27

/ 2 pts

The tendency of individuals to hold money to pay for unexpected transactions is known as<br>

The tendency of individuals to hold money to pay for unexpected transactions is known as

Keynesian motive.

 
 
 
Correct Answer

precautionary motive.

 
 
 
You Answered

speculative motive.

 
 
 

conditional motive.

 
 
 
 
 
 

Question 28

/ 2 pts

Which of the following statements is correct?<br>

Which of the following statements is correct?
You Answered

Prices have fallen in the majority of years since 1939.

 
 
 
Correct Answer

Throughout U.S. history prices have fallen in more years than they have risen.

 
 
 

Prices fell every year in the 1980s.

 
 
 

Prices have risen every year in the United States since 1800.

 
 
 
 
 
 

Question 29

/ 2 pts

Monetary neutrality refers to the fact that changes in the money supply<br>

Monetary neutrality refers to the fact that changes in the money supply

affect only output in the long run.

 
 
 
Correct!

have no effect on output in the long run.

 
 
 

have a greater effect on prices in the short run than in the long run.

 
 
 

affect output more in the long run than in the short run.

 
 
 
 
 
 

Question 30

/ 2 pts

The typical firm will find that its payoff to reducing price increases after the announcement of a disinflation policy<br>

The typical firm will find that its payoff to reducing price increases after the announcement of a disinflation policy
Correct Answer

increases if it believes that the policy will actually be carried out.

 
 
 

decreases if it believes that the policy will actually be carried out.

 
 
 

is independent of whether the policy is actually carried out.

 
 
 
You Answered

depends on movements in the LRAS curve.
 
 
 
 
 

Question 31

/ 2 pts

Suppose the Fed sets an inflation target of 2% a year. If economic growth averages 3% per year and velocity grows by 1% per year, by how much should it increase the money supply each year?<br>

Suppose the Fed sets an inflation target of 2% a year. If economic growth averages 3% per year and velocity grows by 1% per year, by how much should it increase the money supply each year?

5%

 
 
 

6%

 
 
 
Correct Answer

4%

 
 
 
You Answered

2%

 
 
 
 
 
 

Question 32

/ 2 pts

If in the short run prices did not respond at all to changes in aggregate demand, the short-run aggregate supply curve would<br>

If in the short run prices did not respond at all to changes in aggregate demand, the short-run aggregate supply curve would

slope down.

 
 
 
Correct!

be horizontal.

 
 
 

be vertical.

 
 
 

slope up.

 
 
 
 
 
 

Question 33

/ 2 pts

Keynes assumed that the return on money was<br>

Keynes assumed that the return on money was
Correct Answer

zero.

 
 
 

the nominal interest rate minus the expected inflation rate.

 
 
 

the same as the return on bonds.

 
 
 
You Answered

the same as the return on bonds, adjusted for capital gains.

 
 
 
 
 
 

Question 34

/ 2 pts

If credit card companies imposed a per purchase charge for using their cards,<br>

If credit card companies imposed a per purchase charge for using their cards,

money balances would fall, and the velocity of money would rise.

 
 
 
Correct Answer

money balances would rise, and the velocity of money would fall.

 
 
 

both money balances and the velocity of money would fall.

 
 
 
You Answered

both money balances and the velocity of money would rise.

 
 
 
 
 
 

Question 35

/ 2 pts

According to New Keynesians, why does an expected change in the money supply affect output in the short run?<br>

According to New Keynesians, why does an expected change in the money supply affect output in the short run?
Correct Answer

Many prices are set by long-term contracts and thus cannot respond quickly to increases in the money supply.

 
 
 

Prices are flexible in the short run.

 
 
 
You Answered

People expect central banks to increase the money supply in response to increases in output.

 
 
 

Firms have imperfect information.

 
 
 
 
 
 

Question 36

/ 2 pts

According to Baumol and Tobin, the transactions demand for money is<br>

According to Baumol and Tobin, the transactions demand for money is

positively related to market interest rates, but the velocity of money is negatively related to market interest rates.

 
 
 
Correct Answer

negatively related to market interest rates, but the velocity of money is positively related to market interest rates.

 
 
 
You Answered

positively related to market interest rates, as is the velocity of money.

 
 
 

negatively related to market interest rates, as is the velocity of money.

 
 
 
 
 
 

Question 37

/ 2 pts

The book in which Milton Friedman and Anna Schwartz reported on their study of the relation between money and the business cycle is<br>

The book in which Milton Friedman and Anna Schwartz reported on their study of the relation between money and the business cycle is
Correct!

A Monetary History of the United States.

 
 
 

Money and the Cycle.

 
 
 

The General Theory of Employment, Interest, and Money.

 
 
 

Money through the Ages.

 
 
 
 
 
 

Question 38

/ 2 pts

Which of the following is true of the new classical view of stabilization policy?<br>

Which of the following is true of the new classical view of stabilization policy?
You Answered

It is necessary during recessions but not during booms.

 
 
 

It has been very successful in the period since the Great Depression.

 
 
 
Correct Answer

It is unnecessary because households and firms make use of all available information in forming expectations of the price level.
 
 

It is necessary, but it should not be overused.

 
 
 
 
 
 

Question 39

/ 2 pts

An important distinction between Friedman’s and Keynes’ view of money demand was that<br>

An important distinction between Friedman’s and Keynes’ view of money demand was that
Correct Answer

Friedman thought that interest rates had a smaller effect than Keynes.

 
 
 

Keynes emphasized the effect of expected average lifetime income.

 
 
 

Friedman thought that interest rates had a larger effect than Keynes.

 
 
 
You Answered

Friedman assumed the return on money was zero.

 
 
 
 
 
 

Question 40

/ 2 pts

Which of the following schools of thought among economists believe that activist stabilization policy is ever desirable?<br>

Which of the following schools of thought among economists believe that activist stabilization policy is ever desirable?

Only new Keynesian and new classical

 
 
 
You Answered

Only new Keynesian and real business cycle

 
 
 

New Keynesian, new classical, and real business cycle

 
 
 
Correct Answer

Only new Keynesian

 
 
 
 
 
 

Question 41

/ 2 pts

During the late 1970s, households, businesses, and policymakers shifted to the opinion that<br>

During the late 1970s, households, businesses, and policymakers shifted to the opinion that
You Answered

higher inflation was acceptable provided it resulted in higher employment.

 
 
 

a reduction in inflation should take place provided it did not result in disinflation.

 
 
 

higher inflation was acceptable provided it resulted in higher output.

 
 
 
Correct Answer

reducing inflation was necessary even if it resulted in lower levels of employment and output.

 
 
 
 
 
 

Question 42

/ 2 pts

If oil prices fall at the same time that the federal government increases its spending, in the short run<br>

If oil prices fall at the same time that the federal government increases its spending, in the short run

aggregate output and the price level will both fall.

 
 
 
Correct!

aggregate output will increase, but the price level may either increase or decrease.

 
 
 

aggregate output and the price level will both increase.

 
 
 

aggregate output will increase, but the price level will fall.

 
 
 
 
 
 

Question 43

/ 2 pts

Which of the following is true of the new Keynesian view of stabilization policy?<br>

Which of the following is true of the new Keynesian view of stabilization policy?

It is unnecessary because output fluctuations reflect productivity disturbances.

 
 
 

It is unnecessary because output fluctuations are largely the result of policy mistakes by the Fed.

 
 
 

It is necessary during recessions but not during booms.

 
 
 
Correct!

It is necessary because shifts in aggregate demand are the main source of movements in current output.

 
 
 
 
 
 

Question 44

/ 2 pts

When economists state that money is neutral in the long run, they mean that in the long run,<br>

When economists state that money is neutral in the long run, they mean that in the long run,
You Answered

the price level is independent of the nominal money supply.

 
 
 
Correct Answer

the level of output is independent of the nominal money supply.

 
 
 

fluctuations in the money supply are equally likely to lead to recessions as to expansions.

 
 
 

changes in the money supply have the same impact on the rich as they do on the poor.

 
 
 
 
 
 

Question 45

/ 2 pts

Money’s convenience yield is<br>

Money’s convenience yield is
Correct Answer

the amount of interest sacrificed in exchange for money’s safety, liquidity, and low information costs.

 
 
 
You Answered

the nominal interest rate paid on money balances plus the expected inflation rate.

 
 
 

the nominal interest rate paid on money balances minus the expected inflation rate.

 
 
 

the interest rate on T-bills minus the interest rate on money.

 
 
 
 
 
 

Question 46

/ 2 pts

Most economists believe that the aggregate supply curve is<br>

Most economists believe that the aggregate supply curve is

upward-sloping in the long run, but vertical in the short run.

 
 
 
Correct Answer

upward-sloping in the short run, but vertical in the long run.

 
 
 
You Answered

vertical in both the short run and in the long run.

 
 
 

upward-sloping in both the short run and in the long run.

 
 
 
 
 
 

Question 47

/ 2 pts

The inclusion in <i>M1</i> of interest-bearing substitutes for conventional checkable deposits in the early 1980s<br>

The inclusion in M1 of interest-bearing substitutes for conventional checkable deposits in the early 1980s
You Answered

increased the demand for M1 at each level of nominal GDP, thereby increasing velocity.
 
 

decreased the demand for M1 at each level of nominal GDP, thereby decreasing velocity.
 
 

decreased the demand for M1 at each level of nominal GDP, thereby increasing velocity.
 
 
Correct Answer

increased the demand for M1 at each level of nominal GDP, thereby decreasing velocity.
 
 
 
 
 

Question 48

/ 2 pts

Milton Friedman and Anna Schwartz conclude that<br>

Milton Friedman and Anna Schwartz conclude that
Correct Answer

changes in money growth cause output fluctuations.

 
 
 

there is no causal link between the money supply and output.

 
 
 
You Answered

output fluctuations cause changes in money growth.

 
 
 

there is no evidence for changes in the money supply that are not influenced by changes in output or by third factors that influenced both money and output.
 
 
 
 
 

Question 49

/ 2 pts

The argument that changes in output cause changes in the money supply is known as<br>

The argument that changes in output cause changes in the money supply is known as

the money multiplier effect.

 
 
 
You Answered

direct causation.

 
 
 

the liquidity effect.

 
 
 
Correct Answer

reverse causation.

 
 
 
 
 
 

Question 50

/ 2 pts

Which of the following is the correct expression for short-run aggregate supply in the new classical view?<br>

Which of the following is the correct expression for short-run aggregate supply in the new classical view?

Yu57353 = Y + a(P – Pe)
 
 
You Answered

Y = Yu57353 + a(P + Pe)
 
 
Correct Answer

Y = Yu57353 + a(P – Pe)
 
 

Yu57353 = Y + a(P + Pe)
 
 
 
 
Quiz Score: 38 out of 100

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