Econ

The rate of change of inflation is affected by: (I) inflation expectations (II) demand (III) the measurement of inflation (iv) supply shocks

(I), (II), and (iv)

If expected inflation is 2% and actual inflation is 2.8% then unexpected inflation is.

0.8%

The marginal propensity to consume is the

Fraction of each dollar of extra income that household spend on consumption

Precautionary savings are

Savings for emergency situation's

Which of the following causes shifts in the IS curve

Spending shocks occur

In the business cycle, a peak is immediately followed by a

Trough

Arguably, it would be quite accurate to say that over the last year or so (2021-2022) inflationary expectations have increased

True

The slope of consumption function is the

marginal propensity to consume

Movement along a consumption curve is caused by factors, other than income

True

The MP curve is horizontal because of the interest rate shown in the book is composed of the "risk-free interest-rate" which is that on US government securities add a "Risk premium" and these do not very with GDP (plotted on the horizontal axis).

True

Typically state unemployment rates move together (an increase in one state happens at the same time as an increase in another).

True

An example of a leading indicator is

Unemployment

Macro economic equilibrium in the open economy

Y=C-I-G-NX

When the economy is at potential GDP, the unexpected inflation rate is _______, and the unemployment rate is equal to ____.

Zero; the natural rate of unemployment

If an economy has a positive output, gap of 2.75% this means.

GDP is 2.75% above potential GDP.

If the expected inflation rate is 3% and the actual inflation is 4.2%, then it unexpected inflation is

1.2%

The permanent income hypothesis implies that young consumers with no savings and low income, will fund permanent consumption by

Borrowing

A good proxy, for the risk free interest rate is the interest rate on a

Loan to a member of the public who has good credit

You spend $400 on new books for your courses this semester, in which component of aggregate expenditure is this expenditure included

Planned investment

The output gap is negative when

Potential GDP exceeds actual GDP

In a business cycle, a trough is immediately followed by a

Recession

What is the permanent income hypothesis?

The idea that people choose how much to consume based on their long-term average income

Demand-pull inflation is inflation resulting from

excess demand