Macroeconomics Chapter 13 Quiz
Which of the following is considered a supply shock?
an increase in input costs
The Fed uses its tools to counteract:
booms and recessions
Generally, economists believe that monetary policy should focus on price stability in the _____ run and output or income in the _____ run.
long; short
Negative demand shocks to the economy can come from:
reductions in consumer demand.
Tightening monetary policy causes interest rates to ____ and aggregate ____ to _______.
rise; demand; decrease
When the housing bubble collapsed in 2007, ____ rose significantly, and the Fed ____ interest rates.
unemployment; lowered
Starting at equilibrium point d, if the cost of inputs rises, the short-run equilibrium will move to point _____, and thus real output will _____ and the price level will _____.
b; decrease; increase
In times of economic downturn the Fed will engage in ____ monetary policy by ____ bonds.
expansionary; buying
According to the Taylor rule, the lower the inflation rate, other things equal, the:
lower the federal funds target rate.
In a liquidity trap:
monetary policy is ineffective in changing income and output