C. durable goods consumption rises.

2. According to John Taylor's (and Alan Greenspan's?) monetary rule, the nominal federal funds rate should increase if inflation is
C. above 2 percent and GDP is above its natural rate

3.Automatic stabilizers largely eliminate
D. the inside lag.

4. All of the following can definitely be considered an automatic stabilizer, EXCEPT a(n)
B. investment tax credit

6. A fall in the index of leading indicators is supposed to predict that
A. a downturn in the business cycle is likely in the near future

7. A monetary policy that SPECIFIES IN ADVANCE different levels of monetary growth corresponding to different economic conditions is called a(n)
C. active monetary rule.

8. A political business cycle is said to exist when
B. politicians manipulate the economy for electoral gain.

9. According to the Mundell-Fleming model, an appreciation of the exchange rate would
B. increase import demand and decrease export demand.

10. According to the Mundell-Fleming model, in a small country with a floating exchange rate, a tax cut will cause the exchange rate to
A. rise.

11. All of the following represent supply/price shocks EXCEPT
C. the introduction of a debit card, increasing the velocity of money.

12. All of the following are possible explanations for the worldwide slowdown in economic growth during the 70's and 80's EXCEPT
D. scarcity of non-petroleum raw materials.

13. Advocates of the Y=AK model interpret capital as
C. including knowledge.

14. A permanent change in the growth rate of total output can arise from a change in the
A. rate of technological progress.

15. At the Golden Rule level of capital accumulation, the marginal product of

B. depreciation rate.

16. A war has wrecked the economy of Baloneya: both the capital stock and the work force have been reduced by 50 percent. If the economy's production function has constant returns to scale, how will the postwar level of output per worker compare to the prewar level?
C. It will be the same.

17. An economy starts off in a steady state with less capital than at the Golden Rule level. Now the saving rate changes to the level that will achieve the Golden Rule. What is the path of consumption during the transition to the Golden Rule steady state?
A. It is lower, then higher than in the initial steady state.

18. An economy is in a steady state with capital higher than the Golden Rule level. Now the saving rate falls to a level that will achieve the Golden Rule capital stock in the long run. What will happen to the level of consumption between the initial and new steady states?
C. It will rise instantly and then will fall gradually.

19. A teenager is not able to find a job because the legal minimum wage is higher than the wage that firms are willing to offer.This situation is an example of
B. structural unemployment.

20. An increase in aggregate demand, such as that due to an increase in government purchases increases
D. output in the short run and prices in the long run.

21. According to the data
B. the real wage is somewhat procyclical.

22. All three models of aggregate supply presented in Chapter 13 share the feature that, if the price level is above the expected price level, then
D. output will be above its natural rate.

23 Assume that the nominal exchange rate for the euro is .75 euros per dollar. Suppose that a Volkswagen Golf costs 10,000 euros in Germany, while it costs $12,000 in the United States. What is the real exchange rate?
B. 0.9

24. According to the classical dichotomy, which of these magnitudes is affected by monetary policy?
A. The price level

25. An example of a person who is counted as unemployed is a

Date: 2015-12-11; view: 1083