Chapter 16
Chapter 17 & 18
Chapter 19 & 20
Chapter 20 & 21
Chapter 22 & 23
100
What is liquidity?
Liquidity means the easy with which an asset can be converted into the economy's medium of exchange.
100
What is quantity theory of money?
a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate.
100
True.
Aggregate demand → A schedule or curve that shows the total quantity of goods and services demanded (purchased) at different price levels. True or False
100
What is the equation of the spending multiplier?
Spending Multiplier = 1/(1-MPC) or Spending Multiplier =1/MPS
100
In the long-run, what form does the phillips curve take? a.slopes downward b. slopes upward c. vertical d. horizontal
c. vertical
200
Along the short-run Phillips curve, when the unemployment rate goes down, the inflation rate goes up or down?
the inflation rate goes up when the inflation rate goes down in the short-run according to the Phillips curve.
200
What’s appreciation and depreciation?
Appreciation: an increase in the value of that country's currency with respect to one or more foreign reference currencies; depreciation: the loss of value of a country's currency with respect to one or more foreign reference currencies.
200
a. A country's trade policy has no impact on the size of its trade balance.
Which of the following statements about trade policy is true? a. A country's trade policy has no impact on the size of its trade balance. b. none of these answers c. A restrictive import quota decreases a country's net exports. d. A restrictive import quota increases a country's net exports.
200
Does money supply affect real variables? Nominal variables?
Nominal variables
200
a. the claim that unemployment eventually returns to its normal or "natural" rate, regardless of the unemployment rate b. the claim that unemployment eventually returns to its normal or "natural" rate, regardless of the interest rate c. the claim that unemployment eventually returns to its normal or "natural" rate, regardless of the inflation rate d. the claim that unemployment eventually returns to its normal or "natural" rate, regardless of the disinflation rate
c. the claim that unemployment eventually returns to its normal or "natural" rate, regardless of the inflation rate What is the natural-rate hypothesis?
300
Rank the liquidity of the following: currency stocks & bonds a house
The following items are ranked based on liquidity: 1. currency 2. stocks & bonds 3. a house
300
When the Fed adds more money to the economy, the Money Supply curve shifts to the ________, causing the equilibrium price level to ________. a. Right, decrease b. Right, increase c. Left, decrease d. Left, increase
b. Right, increase
300
Efficiency wages → A wage that minimizes wage costs per unit of output by encouraging greater effort or reducing turnover. True or False
True.
300
______ is when the economy is experiencing both stagnation and inflation.
Stagflation
300
State the Philip curve equation?
unemployment rate = natural rate of unemployment -a(actual inflation - expected inflation)
400
The long-run Phillips curve is vertical or horizontal?
The long-run Phillips curve is vertical.
400
When inflation turns out to be higher than expected, borrowers will be ________ off, and lenders will be ________ off. a. better, worse b. better, better c. worse, worse d. worse, better
a. better, worse
400
Which of the following statement regarding the loanable funds market is true? a. A decrease in the government budget deficit increases the real interest rate. b. An increase in the government budget deficit shifts the supply of loanable funds to the right. c. An increase in private saving shifts the supply of loanable funds to the left. d. An increase in the government budget deficit shifts the supply of loanable funds to the left.
d. An increase in the government budget deficit shifts the supply of loanable funds to the left.
400
The crowding-out effect tends to dampen the effects of fiscal policy on aggregate demand. True or False?
True. The crowding-out effect tends to dampen the effects of fiscal policy on aggregate demand.
400
What is the pro side of the question “Should the the Central Bank Aim for Zero Inflation?” a. the economy is inherently unstable, and policy can manage aggregate to offset the inherent instability b. inflation has many costs and few if any benefits. the cost of eliminating inflation is temporary, so it is worth doing c. our society discourages saving in many ways d. budget deficits impose an unjustifiable burden on future generations by raising their taxes and lowering their incomes
b. inflation has many costs and few if any benefits. the cost of eliminating inflation is temporary, so it is worth doing
500
What distinguishes money from other assets in the economy?
Money is different from other assets in the economy in the sense that their liquidities are different.
500
If the Fed increased the supply of money, and velocity remains unchanged, according to the quantity equation: a. PxY must decrease b. Y must decrease c. PxY must increase d. Y must increase
c. PxY must increase.
500
Suppose that the government spends $10 billion on the development of infrastructure in urban areas. Explain how the aggregate demand may increase by more than $10 billion. Explain how the aggregate demand may increase by less than $10 billion.
re: increase - spending multiplier. re: decrease - crowding out effect.
500
What are the three effects that slope down the aggregate demand curve?
1. The Wealth Effect 2. The Interest-Rate Effect 3. The Exchange-Rate Effect
500
a. The discrepancy between announcements and actions b. the normal rate of unemployment c. the production of goods and services valued at current prices d. a legal minimum on the price at which a good can be sold
a. The discrepancy between announcements and actions what is the definition of “time inconsistency of policy”?
M
e
n
u