Question 1

Since 1970, for the U.S. economy, the largest negative output gap occurred during the recession of ________; however, the largest percentage drop in employment was during the recession of ________.

Accepted Answer

A)   1981-1982; 1974
B)   2007-2009; 2001
C)   1973-1975; 2007-2009
D)   2001; 1979
E)   1990-1991; 2001

Question 2

If  , the macroeconomy is:

Accepted Answer

A)   at its potential level of output.
B)   in a recessionary gap.
C)   in an expansionary gap.
D)   Not enough information is given.
E)   None of these answers is correct.

Question 3

The short-run model determines ________ and ________.

Accepted Answer

A)   current output; current inflation
B)   current output; long-run inflation
C)   unemployment; current inflation
D)   unemployment; potential output
E)   potential output; unemployment

Question 4

The relationship between actual output in an economy, the long-run component, and the short-run component is given as Current output =Long-run trend+ Short-run fluctuations.

Accepted Answer

A) True 
 B)False

Question 5

The long-run model determines ________ output and ________.

Accepted Answer

A)   current; unemployment
B)   potential; unemployment
C)   current; long-run inflation
D)   potential; potential inflation
E)   potential; long-run inflation

Question 6

Defining  as current output, 
As potential output, and 
As short-run fluctuations, which of the following equations is correct?

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 7

What does the Phillips curve represent?

Accepted Answer

It is the positive relationship between ...

Question 8

The Great Depression stimulated ________ to write ________, which is considered to be the birth of modern macroeconomics.

Accepted Answer

A)   John Hicks; Value and Capital
B)   Karl Marx; Das Kapital
C)   David Ricardo; Principles of Political Economy and Taxation
D)   Milton Friedman and Anna J. Schwartz; A Monetary History of the United States, 1867-1960
E)   John Maynard Keyes; The General Theory of Employment, Interest, and Money

Question 9

Generally speaking, the rate of inflation rises during a recession.

Accepted Answer

A) True 
 B)False

Question 10

Yale professor Ray Fair's presidential prediction model uses ________ and has ________.

Accepted Answer

A)   macroeconomic variables; been unsuccessful since the Reagan administration
B)   macroeconomic variables; predicted 10 of the past 14 presidential races
C)   Okun's law; predicted the expected rate of inflation
D)   unemployment;only predicted 2 of the last 12 Senate compositions
E)   a theoretical model; confirmed the results of Dr. Duncan Black's median voter theory

Question 11

Defining  as current output, 
As potential output, and 
As short-run fluctuations, which of the following equations is correct?

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 12

New technology, oil price changes, pork-barrel spending, interest rate changes, changes in planned investment, and disasters are examples of:

Accepted Answer

A)   long-term economic shocks.
B)   short-term economic shocks.
C)   political unrest.
D)   monetary policy.
E)   fiscal policy.

Question 13

Defining  as current output, and 
As potential output, how can the equation 
Be best defined?

Accepted Answer

A)   the percentage deviation of current output from potential output
B)   the difference between current output and potential output
C)   the percentage deviation of potential output from current output
D)   the deviation of current output from potential output
E)   the difference between potential output and current output

Question 14

Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade; however, monetary policymakers are slow to recognize that the change is to potential-not current-output and they interpret the decrease in output as a recession that leads current output to fall below potential output. In this scenario, policymakers believe that recessionary pressures are building and incorrectly respond by increasing interest rates, sending the economy into a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 15

One implication of the Keynes quote, "In the long run we are all dead," is that:

Accepted Answer

A)   the economy is always in its long-run equilibrium.
B)   we know with certainty what the long run is.
C)   the long run is made up of a sequence of short runs.
D)   there is no difference between the long and short runs.
E)   there is no short run.

Question 16

According to the Phillips curve, short-term changes in inflation are due to changes in:

Accepted Answer

A)   interest rates.
B)   unemployment.
C)   short-term output fluctuations.
D)   long-term inflation.
E)   long-term output.

Question 17

Figure 9.7: The Output Gap 1980-2015  (Source: Federal Reserve Economic Data, St. Louis Federal Reserve)
-Figure 9.7 above shows the output gap for the years 1960-2015. Using the Phillips curve and Okun's law, discuss the impacts on inflation and unemployment for the years 1997-2000 and 2008-2015. From this analysis, what is the relationship between unemployment and inflation?

Accepted Answer

The Phillips curve is the positive relat...

Question 18

Since 1950, economic fluctuations in the United States (i.e., the output gap)  have generally been in the ________ percent to ________ percent range.

Accepted Answer

A)   -4; 4
B)  -5; 1
C)   -8; 8
D)   -2; 2
E)   -3; 0

Question 19

Refer to the following figure to answer the following questions.
Figure 9.3: Percent Change in U.S. Employment: 1980-2015 
-Based on the data presented in Figure 9.3, which of the following periods is/are likely (a)  recession(s) ?

Accepted Answer

A)   1984, 1988, and 2006
B)   1988 and 2014
C)   1983, 1990, and 2001
D)   2005
E)   Not enough information is given.

Question 20

Which of the following is NOT an example of a short-term macroeconomic shock?

Accepted Answer

A)   a drought
B)   high unemployment
C)   increased military spending
D)   a change in the tax code
E)   political unrest

Exam 9: An Introduction to the Short Run

One implication of the Keynes quote, "In the long run we are all dead," is that:

Correct Answer
verified

Generally speaking, the rate of inflation rises during a recession.

Correct Answer
verified

Defining as current output, As potential output, and As short-run fluctuations, which of the following equations is correct?

Correct Answer
verified

Since 1950, economic fluctuations in the United States (i.e., the output gap) have generally been in the percent to percent range.

Correct Answer
verified

Which of the following is NOT an example of a short-term macroeconomic shock?

Correct Answer
verified

The relationship between actual output in an economy, the long-run component, and the short-run component is given as Current output =Long-run trend+ Short-run fluctuations.

Correct Answer
verified

Correct Answer
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The short-run model determines and .

Correct Answer
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Refer to the following figure to answer the following questions. Figure 9.3: Percent Change in U.S. Employment: 1980-2015 -Based on the data presented in Figure 9.3, which of the following periods is/are likely (a) recession(s) ?

Correct Answer
verified

The long-run model determines output and .

Correct Answer
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Since 1970, for the U.S. economy, the largest negative output gap occurred during the recession of ; however, the largest percentage drop in employment was during the recession of .

Correct Answer
verified

The Great Depression stimulated to write , which is considered to be the birth of modern macroeconomics.

Correct Answer
verified

New technology, oil price changes, pork-barrel spending, interest rate changes, changes in planned investment, and disasters are examples of:

Correct Answer
verified

Defining as current output, As potential output, and As short-run fluctuations, which of the following equations is correct?

Correct Answer
verified

Defining as current output, and As potential output, how can the equation Be best defined?

Correct Answer
verified

What does the Phillips curve represent?

Correct Answer
verified
It is the positive relationship between ...
View Answer

Yale professor Ray Fair's presidential prediction model uses and has .

Correct Answer
verified

If , the macroeconomy is:

Correct Answer
verified

According to the Phillips curve, short-term changes in inflation are due to changes in:

Correct Answer
verified

Correct Answer
verified
The Phillips curve is the positive relat...
View Answer

Exam 9: An Introduction to the Short Run

One implication of the Keynes quote, "In the long run we are all dead," is that:

Correct AnswerverifiedShow Answer

Generally speaking, the rate of inflation rises during a recession.

Correct AnswerverifiedShow Answer

Defining as current output, As potential output, and As short-run fluctuations, which of the following equations is correct?

Correct AnswerverifiedShow Answer

Since 1950, economic fluctuations in the United States (i.e., the output gap) have generally been in the ________ percent to ________ percent range.

Correct AnswerverifiedShow Answer

Which of the following is NOT an example of a short-term macroeconomic shock?

Correct AnswerverifiedShow Answer

The relationship between actual output in an economy, the long-run component, and the short-run component is given as Current output =Long-run trend+ Short-run fluctuations.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The short-run model determines ________ and ________.

Correct AnswerverifiedShow Answer

Refer to the following figure to answer the following questions. Figure 9.3: Percent Change in U.S. Employment: 1980-2015 -Based on the data presented in Figure 9.3, which of the following periods is/are likely (a) recession(s) ?

Correct AnswerverifiedShow Answer

The long-run model determines ________ output and ________.

Correct AnswerverifiedShow Answer

Since 1970, for the U.S. economy, the largest negative output gap occurred during the recession of ________; however, the largest percentage drop in employment was during the recession of ________.

Correct AnswerverifiedShow Answer

The Great Depression stimulated ________ to write ________, which is considered to be the birth of modern macroeconomics.

Correct AnswerverifiedShow Answer

New technology, oil price changes, pork-barrel spending, interest rate changes, changes in planned investment, and disasters are examples of:

Correct AnswerverifiedShow Answer

Defining as current output, As potential output, and As short-run fluctuations, which of the following equations is correct?

Correct AnswerverifiedShow Answer

Defining as current output, and As potential output, how can the equation Be best defined?

Correct AnswerverifiedShow Answer

What does the Phillips curve represent?

Correct AnswerverifiedIt is the positive relationship between ...View AnswerShow Answer

Yale professor Ray Fair's presidential prediction model uses ________ and has ________.

Correct AnswerverifiedShow Answer

If , the macroeconomy is:

Correct AnswerverifiedShow Answer

According to the Phillips curve, short-term changes in inflation are due to changes in:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe Phillips curve is the positive relat...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Since 1950, economic fluctuations in the United States (i.e., the output gap) have generally been in the percent to percent range.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The short-run model determines and .

Correct Answer
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Correct Answer
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The long-run model determines output and .

Correct Answer
verified

Since 1970, for the U.S. economy, the largest negative output gap occurred during the recession of ; however, the largest percentage drop in employment was during the recession of .

Correct Answer
verified

The Great Depression stimulated to write , which is considered to be the birth of modern macroeconomics.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It is the positive relationship between ...
View Answer

Yale professor Ray Fair's presidential prediction model uses and has .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Phillips curve is the positive relat...
View Answer