MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 17, Problem 6SQ
To determine
The natural rate hypothesis.
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A movement to the right along a given short-run Phillips curve could be caused by
a.
contractionary monetary policy, but not an increase in the natural rate of unemployment.
b.
expansionary monetary policy, but not an increase in the natural rate of unemployment.
c.
an increase in the natural rate of unemployment or a contractionary monetary policy.
d.
an increase in the natural rate of unemployment or expansionary monetary policy.
In the Keynesian theory, money wages do not fall response to a decrease in aggregate demand .
a. true
b. false
A movement to the left along a given short-run Phillips curve could be caused by
a.
contractionary monetary policy, but not a reduction in the natural rate of unemployment.
b.
expansionary monetary policy, but not a reduction in the natural rate of unemployment.
c.
a reduction in the natural rate of unemployment or expansionary monetary policy.
d.
either a reduction in the natural rate of unemployment or a contractionary monetary policy.
Chapter 17 Solutions
MACROECONOMICS FOR TODAY
Ch. 17.3 - Prob. 1YTECh. 17.6 - Prob. 1YTECh. 17 - Prob. 1SQPCh. 17 - Prob. 2SQPCh. 17 - Prob. 3SQPCh. 17 - Prob. 4SQPCh. 17 - Prob. 5SQPCh. 17 - Prob. 6SQPCh. 17 - Prob. 7SQPCh. 17 - Prob. 8SQP
Ch. 17 - Prob. 9SQPCh. 17 - Prob. 1SQCh. 17 - Prob. 2SQCh. 17 - Prob. 3SQCh. 17 - Prob. 4SQCh. 17 - Prob. 5SQCh. 17 - Prob. 6SQCh. 17 - Prob. 7SQCh. 17 - Prob. 8SQCh. 17 - Prob. 9SQCh. 17 - Prob. 10SQCh. 17 - Prob. 11SQCh. 17 - Prob. 12SQCh. 17 - Prob. 13SQCh. 17 - Prob. 14SQCh. 17 - Prob. 15SQCh. 17 - Prob. 16SQCh. 17 - Prob. 17SQCh. 17 - Prob. 18SQCh. 17 - Prob. 19SQCh. 17 - Prob. 20SQ
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- 1).True or False: If the Fed undertakes expansionary monetary policy, it can retum the economy to its original inflation rate and original unemployment rate. 2).True or False: If the Fed undertakes expansionary monetary policy, it can return the economy to its original inflation rate and original unemployment rate. True Falsearrow_forwardThe Fed is fighting recession and it happens to overstimulate the economy. If the expected inflation rate rises above the 2 percent goal, what is the cost of returning the inflation rate back to its goal? The cost of returning the inflation rate back to its goal is _______. A. an inflationary gap and an even higher inflation rate than initially B. unemployment below the natural unemployment rate C. a decrease in potential GDP and aggregate supply D. a recessionary gap and a higher unemployment rate Thanks!arrow_forwardThe Fed is fighting recession and it happens to overstimulate the economy. If the expected inflation rate rises above the 2 percent goal, what is the cost of returning the inflation rate back to its goal? The cost of returning the inflation rate back to its goal is _______. A. an inflationary gap and an even higher inflation rate than initially B. unemployment below the natural unemployment rate C. a decrease in potential GDP and aggregate supply D. a recessionary gap and a higher unemployment ratearrow_forward
- An outside lag is Select one: a. the time it takes for real GDP to reach its potential. b. the period of time it takes for monetary policies to work in the macroeconomy. c. a lag in implementing policy among politicians. d. the time it takes for inflation to be reduced to its target rate.arrow_forwardIn order to combat inflation, the Fed will ________ the federal funds rate thereby ________ the quantity of money. a. raise; increase b. lower; increase c. raise; decrease d. lower; decreasearrow_forwardAssume that there is a negative aggregate supply shift. The Fed wants to fight inflation. They will carry out a Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a neither a dove or hawk policy both a dove or hawk policy dove policy C d hawk policyarrow_forward
- Which of the following is not an essential element of inflationtargeting? A. increased transparency of monetary policy B. a mechanism for firing the head of the central bank if the inflation target is not achieved C. an institutional commitment to price stability as the primary, long-run goal of monetary policy D. public announcement of a numerical target for inflationarrow_forwardA. What assumptions did Thomas Sargent make when he claimed that inflation is always and everywhere a fiscal phenomenon?" B. Why is it appropriate in the book's short-term model for the author to use the Phillips Curve as an Aggregate Supply curve? Does it capture the working of the labor market as well as an AS curve based, say, on sticky wages? C. Provide an example of the book's short-run model being based on "microfoundations."arrow_forwardWhy do negative supply shocks pose a dilemma for policymakers? A. Negative supply shocks do not respond to policy interventions. B. Monetary policy following negative supply shocks can lead an economy into a deflationary spiral. C. Policymakers must choose between stabilizing inflation and stabilizing economic activity. D. Policies that address negative supply shocks are less effective than those that address positive supply shocks.arrow_forward
- classical economists a. argued that money supply determined aggregate demand b. believed that the quantity of money influences interest rates and real wages c. regarded monetary policy as unimportant since quantity of money does not determine price level. d. that prices would increase more than proportionate to an increase in money supplyarrow_forwardSuppose a central bank targets an inflation rate of 3%. She projects a long-termeconomic growth rate of 4%.a. Using the Classical Theories, suggest an appropriate long-term monetary policy.State the necessary assumptions. b. Suppose the new Chairman of the central bank will assume his duty next year.He is widely expected to be a “monetary hawk” – he favors a “tighter” growth inmoney supply.Other things being constant, how would this affect the expected inflation rate,nominal interest rate and the current general price level? Using relevant ClassicalTheories, briefly explain your answers.arrow_forwardStatement 1:If inflation rate is within the target, policy change in necessary. Statement 2: If inflation rate differs from the target, policy change is necessary. *a. both statements are falseb. only statement 2 is correctc. none of the choicesd. both statements are correcte. only statement 1 is correctarrow_forward
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