ap macroeconomics modules 30-36

debt inflation is

all of the above

which of the following is a reason to be concerned about persistent budget deficit?

all of the above

contractionary monetary policy attempts to __________ aggregate demand by __________ interest rates.

decrease, increasing

which of the following led to recovery from the great depression?

expansionary fiscal policy by politicians persuaded by keynesian economics

At each meeting of the Federal Open Market Committee, the Federal Reserve sets a target for which of the following?

federal funds rate

revenue generated by the government's right to print money is known as

seignorage

which of the following is a central point of monetarism?

the fed should follow a monetary policy rule

in the velocity equation, MxV=PxY, nominal GDP is represented by

PxY

which of the following best describes the 23 years prior to the great recession?

a period of consensus building among economists

demand-pull inflation is caused by which of the following?

an increase in aggregate demand

an increase in the price level resulting from an increase in energy prices is an example of

cost-push inflation

monetary neutrality means that, in the long run, changes in the money supply

have no real effect on the economy

the natural rate hypothesis says that the unemployment rate should be

high enough that the actual rate of inflation equals the expected rate

which of the following actions can the central bank take to decrease the equilibrium interest rate?

increase the money supply

an increase in the money supply will lead to which of the following in the short run?

increased aggregate demand

crowding out is less likely to be a result of expansionary fiscal policy when

interest rates are low

the use of discretionary monetary policy was made more difficult during the great recession because

interest rates were near zero

which of the following is the long-run response of the money demand curve to an increase in money supply?

it does not change

which of the following is true about keynesian economics?

it focuses on short-run changes in aggregate demand

which of the following is a major source of disagreement among macroeconomics?

monetary policy should play the main role in stabilization policy

percentage increases in the money supply and average annual increases in the price level for a country provide evidence that

money is neutral in the long run

the short-run phillips curve shows a __________ relationship between __________

negative; unemployment and inflation

the long-run phillips curve is

none of the above

the classical model of the price level is most applicable in

periods of high inflation

which of the following is a goal of monetary policy?

price stability

that fluctuation in total factor productivity growth cause the business cycle is the main tenet of which theory?

real business cycle

which of the following was one of the main arguments against using fiscal stimulus during the great recession?

spending programs might undermine investors' faith in the government's ability to repay its debts, leading to an increase in long term interest rates

during a recession in the united states, what happens automatically to tax revenues and government spending?

tax revenues DECREASE and government spending INCREASES

which of the following fiscal policies is expansionary?

taxes DECREASE by $100 million and government spending INCREASES by $100 million

the ricardian equivalence argument asserts that when households and firms see government spending increase, it creates the expectation that

taxes will increase in the future

which of the following correctly describes how a decrease in the money supply will ultimately affect real GDP?

↓MS→↑𝓲→↓I→↓C→↓AD→↓realGDP

a 10% increase in the money supply will change the aggregate price level in the long run by

10%

in the united states, implicit liabilities

are future debt of the government

the taylor rule for monetary policy sets the federal funds rate based on

both the output gap and the inflation rate

in the classical model of the price level

both the short-run and long-run aggregate supply curves are vertical

if government spending exceeds tax revenues, which of the following is necessarily true? there is a

budget deficit

the cyclically adjusted budget deficit is an estimate of what the budget balance would be if real GDP were

equal to potential output

which of the following is used to assess a government's ability to pay its debt?

debt-GDP ratio

which of the following is an example of an opinion on which economists have reached a broad consensus?

discretionary fiscal policy should only be used to fight recessions under special circumstances

bringing down inflation that has become embedded in expectations is called

disinflation

in the long run, real GDP will tend to

equal potential output

the real quantity of money is *ON THE QUIZ*

equal to m/p

in the long run, changes in the quantity of money affect which of the following?

the aggregate price level

the main difference between the classical model of the price level and keynesian economics is that

the classical model assumes a vertical short-run aggregate supply curve

an inflation tax is

the result of a decrease in the value of money held by the public

an increase in expected inflation will shift

the short-run Phillips curve upward.