Macro Unit 5 Quiz
If de-regulation in the trucking and transportation industries occurred, which of the following is most likely to happen to the long-run Phillips curve?
C) shift left
Which act of Congress requires the Federal government to attempt to create conditions under which there will be ample employment opportunities for those willing and able to work?
A) Employment Act of 1946
Which of the following would most likely be the steps for the central bank of Country A to take to keep an expansionary monetary policy in place?
A) buy bonds to increase the money supply and . lower the interest rate
From a Keynesian economic perspective, which of the following results would occur if the appropriate fiscal policy was implemented by Country A, who is experiencing a recession with a budget deficit?
A) Increase in demand for loanable funds.
The short-run Philips curve is an expression of which of the following tradeoffs?
A) Inflation and unemployment
Which of the following is true of the shirt-run Philips curve?
A) It is related to the AD/AS model and a mirror image of the short-run aggregate supply
Which of the following is true of the long-run Phillips Curve?
A) It is vertical
A decrease in the aggregate demand would result from which of the following monetary policy actions?
A) increase discount rate, sell bonds, increase reserve requirements
A tax system that is more progressive
A) increases the built-in stability within the economy
On the long-run Philips Curve, the correct y-axis label is
A) inflation
f the unemployment rate droops, then according to the SRPC
A) inflation rises
Which of the following would explain unemployment during . the recovery period following a recession using the sticky wages theory?
A) long-term contracts
In the short run, which way does the Philips Curve shift if aggregate demand increases, wages and resources increase, and aggregate supply decreases?
A) right
High Inflation occurred in the late 1970's. Part of the blame rests with the Federal Reserve because their policy focus was on
A) stable interest rates
fiscal policy refers to
A) taxing and spending policy
A.W. Phillips developed the ideas behind the Philips curve but originally his work centered around . the relationship between unemployment and
A) wage rates
In the short run, an expansionary policy will result n which of the following?
B) Decrease in nominal interest rates
Which of the following actions should occur if the Federal Reserve wants to increase the money supply?
B) Decrease the discount rate
Nobel prize-winning Princeton University economist Paul Krugman suggests that during a recession:
B) Interest rates will not necessarily rise due to increases federal borrowing
President Reagan's administration supported cutting the marginal tax rates in the United States and believed that governments revenues would actually climb due to the cutes. This idea was based on
B) Laffer Curve
Suppose fiscal policy was enacted to prevent a recession, but due to the lagging nature of implementing the policy, the economy was already back to normal. Which of the following is the most likely action taken by the Federal Reserve?
B) Sell bonds on the open market
A leftward shift of the short-run Phillips curve s most likely due to
B) an increase in short-run aggregate supply
Suppose the price of oil drastically falls and stays low for at least two years. This change in the market would
B) cause the long-rung Phillips curve too shift left
If congress involves itself in trying to stimulate or slow down the economy it would be called
B) fiscal policy
Suppose an economy is performing such that the aggregate demand curve intersects aggregate supply in t he Keynesian Range. Given the above data, at least part of the short-run Philips curve would be
B) horizontal
A simultaneous decrease in inflation and unemployment could be explained by a decrease in which of the following
B) inflationary expectations
Suppose the US economy had the following statistics: 3% unemployment - Real GDP growth of 4.5% and 5% inflation. The most likely monetary response to this station would be to
B) sell bonds on the open market
Which of the following fiscal policy actions would have the greatest positive potential impact on a recessionary economy?
C) Increase government expenditure with no additional tax revenues being raised
which of the following does the Fed have the LEAST amount of control over?
C) Long-Term Interest Rates
Monetary policy designed to stimulate aggregate demand could include
C) buying government security
If Aggregate Demand Shifts left on the AD/Ad model then one would expect
C) no SRPC shift
If aggregate demand shifts right on the AD/AS model then one would expect
C) no short-run Phillips Curve shift
Which of the following are criticisms of Fiscal Policy maneuvers?
D) Administrative Lag, Recognition Lag, Operational Lag
If the SRPC data point moved from the lower right of the curve to the upper left part of the curve then
D) Aggregate Demand Increased
During an economic expansion, which of the following results from the appropriate fiscal policy?
D) Creation of a budget surplus
If the Federal Reserve is wanting to use monetary policy to support expansionary fiscal policy, which of the following actions would be appropriate
D) Increase in open market buying
How much would a temporary cut in the tax rate of the employee portion of the U.S. Social Security payroll tax affect a recessionary economy
D) It would likely cause an aggregate demand curve shift to the right
If the FED wanted to counteract that move, then which of the following best describes what the FED would do?
D) Raise the Reserve Requirement
Which of the following is true regarding the Long Run Phillips Curve (LPRC)?
D) There is no trade off between unemployment and inflation & It s represented by a downward or negatively sloping curve.
Suppose a new long-term trade dispute arose between Chine and the US which caused exports from both countries to decline 20%. Given this scenario . this long-run Phillips curve will
D) shift right
Disinflation occurs when
D) year over year inflation reductions occur
Which monetary policy action will NOT increase the inflation rate and will NOT decrease the unemployment rate?
E) All the above
Which of the following is NOT a supporting argument for supply-side fiscal policy?
E) Deficit spending is not as likely
In order to combat a severe recession, Country A should take which of the following actions?
E) Increase government spending & decrease taxes
If the U.S. government borrows money to support its fiscal policy, which oof the following occurs?
E) Increase in interest rates & decrease in net exports
Suppose soy milk is a substitute for a dairy milk. if the U.S. government ended a subsidy program for dairy farmers then which of the following is most likely to occur?
E) Increased short-run dairy prices, decreased competition, increased consumption of soy milk
Which of the following are issues associated with debt retirement of bonds when budget surpluses occur and the economy s at full employment
E) Inflation may be higher & interest rates may fall
Which of the following is a true interaction of the interaction between the Aggregate Supply/Aggregate Demand model and changes in the short Phillips curve?
E) Inflation may not be used to sustain long-term job creation
Which of the following is true of the short-run Phillips curve (SRPC) and the long-run Philips curve (LRPC)?
E) The SRPC is downward sloping & The LRPC is vertcal
According to the Short-Run Philips Curve (SRPC), which of the following occurs during a recession?
E) Unemployment increases & Inflation Decreases
Which of the following describes stagflation?
E) all the above
According to the short-run Phillips curve, lower inflation rates are associated with higher unemployment rates. Which one of the economic policies below will result n lower inflation rates and higher unemployment rates in the short run?
F) Contractionary Fiscal Policy & Contractionary Monetary Policy
Which fiscal policy action will NOT increase the inflation rate or decrease the unemployment rate?
Increase in government spending
