14.02 Quiz 1 Solutions Fall 2004 Multiple-Choice Questions (30/100 points)
... Answer: A). In equilibrium, Y is constant and i decreases (IS moves to the left and LM shifts down). Recall that investment, given by I(i,Y), depends negatively on the interest rate. So, as the interest rate decreases, investment increases. Also, we know that: C=c0+ c1(Y-T), and private saving is gi ...
... Answer: A). In equilibrium, Y is constant and i decreases (IS moves to the left and LM shifts down). Recall that investment, given by I(i,Y), depends negatively on the interest rate. So, as the interest rate decreases, investment increases. Also, we know that: C=c0+ c1(Y-T), and private saving is gi ...
Demand and Consumer Choice
... 1. Classify each of the following as employed, unemployed, or not in the labor force: a. a person who is not working but applied for a job at Wal-Mart last week b. a person working part-time who is searching diligently for a full-time job c. an auto worker vacationing in Florida during a layoff at a ...
... 1. Classify each of the following as employed, unemployed, or not in the labor force: a. a person who is not working but applied for a job at Wal-Mart last week b. a person working part-time who is searching diligently for a full-time job c. an auto worker vacationing in Florida during a layoff at a ...
Aggregate Demand and Aggregate Supply
... • How the Short Run Differs from the Long Run • Most economists believe that classical theory describes the world in the long run but not in the short run. • Changes in the money supply affect nominal variables but not real variables in the long run. • The assumption of monetary neutrality is not ap ...
... • How the Short Run Differs from the Long Run • Most economists believe that classical theory describes the world in the long run but not in the short run. • Changes in the money supply affect nominal variables but not real variables in the long run. • The assumption of monetary neutrality is not ap ...
DOC - 嘉義大學
... e. All of above are false. 24.Which of the following statements about cost-push inflation is correct? a. Cost-push inflation starts when an increase in aggregate demand “pushes” costs higher. b. Cost-push inflation may start with a rise in the price of raw materials, but it requires decreases in the ...
... e. All of above are false. 24.Which of the following statements about cost-push inflation is correct? a. Cost-push inflation starts when an increase in aggregate demand “pushes” costs higher. b. Cost-push inflation may start with a rise in the price of raw materials, but it requires decreases in the ...
M10_ABEL4987_7E_IM_C10
... b. The Solow residual is strongly procyclical in U.S. data (1) This accords with RBC theory, which says the cycle is driven by productivity shocks c. But should the Solow residual be interpreted as a measure of technology? (1) If it’s a measure of technology, it should not be related to factors that ...
... b. The Solow residual is strongly procyclical in U.S. data (1) This accords with RBC theory, which says the cycle is driven by productivity shocks c. But should the Solow residual be interpreted as a measure of technology? (1) If it’s a measure of technology, it should not be related to factors that ...
Chapter 11
... Problems in Measuring The Cost of Living The CPI is not a perfect measure of the “cost of living.” ...
... Problems in Measuring The Cost of Living The CPI is not a perfect measure of the “cost of living.” ...
Ch 10
... Example: Explaining the Drop in Aggregate Demand in the Late 2000s • By late 2007, the market values of many U.S. houses purchased with mortgage loans from banks had fallen below the amount people had borrowed, leading many borrowers to simply walk away from their houses. • Banks responded by cutti ...
... Example: Explaining the Drop in Aggregate Demand in the Late 2000s • By late 2007, the market values of many U.S. houses purchased with mortgage loans from banks had fallen below the amount people had borrowed, leading many borrowers to simply walk away from their houses. • Banks responded by cutti ...
Chapter27 - Web.UVic.ca
... Interest Rates and Inflation Why Inflation Influences the Nominal Interest Rate On the average, and other things remaining the same, a 1 percentage point rise in the inflation rate leads to a 1 percentage point rise in the nominal interest rate. Why? The answer is that the financial capital market ...
... Interest Rates and Inflation Why Inflation Influences the Nominal Interest Rate On the average, and other things remaining the same, a 1 percentage point rise in the inflation rate leads to a 1 percentage point rise in the nominal interest rate. Why? The answer is that the financial capital market ...
Some Current Controversies in the Theory of Inflation
... wage increases sufficient to match those increases that rival employers are expected to offer. Otherwise they will lose employees, and their relative market share will fall. Thus even in a situation of zero excess demand, employers on the average will be raising wages by the amount they expect Nomin ...
... wage increases sufficient to match those increases that rival employers are expected to offer. Otherwise they will lose employees, and their relative market share will fall. Thus even in a situation of zero excess demand, employers on the average will be raising wages by the amount they expect Nomin ...
Macroeconomics
... . Forexample.if GDPmeasured at currentpricesincreased from one yearto the next by 5.5%, it cannot be known Ny'any other economicvariablesare alsooften adjusted what oroportionof this increaseis due to an output for inflation.Oneof the mostimportantfor our purposes is due to inflationlt could increas ...
... . Forexample.if GDPmeasured at currentpricesincreased from one yearto the next by 5.5%, it cannot be known Ny'any other economicvariablesare alsooften adjusted what oroportionof this increaseis due to an output for inflation.Oneof the mostimportantfor our purposes is due to inflationlt could increas ...
Lecture Notes Chapter 8
... 2. Aggregate Supply (AS) In the long run, AS is ________________ because the total amount of final goods and services that a country can produce depends on the availability of resources, not on the price level. When an economy uses all the resources and uses them efficiently to produce the maxim ...
... 2. Aggregate Supply (AS) In the long run, AS is ________________ because the total amount of final goods and services that a country can produce depends on the availability of resources, not on the price level. When an economy uses all the resources and uses them efficiently to produce the maxim ...
14.02 Quiz 1 Solutions Fall 2004 Multiple
... Answer: A). In equilibrium, Y is constant and i decreases (IS moves to the left and LM shifts down). Recall that investment, given by I(i,Y), depends negatively on the interest rate. So, as the interest rate decreases, investment increases. Also, we know that: C=c0+ c1(Y-T), and private saving is gi ...
... Answer: A). In equilibrium, Y is constant and i decreases (IS moves to the left and LM shifts down). Recall that investment, given by I(i,Y), depends negatively on the interest rate. So, as the interest rate decreases, investment increases. Also, we know that: C=c0+ c1(Y-T), and private saving is gi ...
Review Packet
... This is NOT zero unemployment, as frictional and structural unemployment are regarded as unavoidable in an economy. Therefore, full employment means no cyclical unemployment, and the full-employment rate is equal to the frictional plus structural rates. It is also called the natural rate of unemploy ...
... This is NOT zero unemployment, as frictional and structural unemployment are regarded as unavoidable in an economy. Therefore, full employment means no cyclical unemployment, and the full-employment rate is equal to the frictional plus structural rates. It is also called the natural rate of unemploy ...
Real interest rate
... NOMINAL AND REAL VALUES What is the nominal hourly wage of $14.28 in 2002 worth in 1982-1984 dollars. To calculate the real wage rate, we divide the nominal wage rate by the CPI and multiply by 100. ...
... NOMINAL AND REAL VALUES What is the nominal hourly wage of $14.28 in 2002 worth in 1982-1984 dollars. To calculate the real wage rate, we divide the nominal wage rate by the CPI and multiply by 100. ...
Chapter 17 Disputes Over Macro Theory and Policy
... are flexible and firms readjust output to its previous level. 5. In RET fully anticipated price-level changes do not change real output, even for short periods. Firms are able to maintain profit and production levels. B. Mainstream View of Self-Correction 1. There is ample evidence that many prices ...
... are flexible and firms readjust output to its previous level. 5. In RET fully anticipated price-level changes do not change real output, even for short periods. Firms are able to maintain profit and production levels. B. Mainstream View of Self-Correction 1. There is ample evidence that many prices ...
I Is Inflation Dead?
... n the past few years the United States has enjoyed the unique economic duet of very low unemployment and declining price inflation. For decades, we have come to associate tight labor markets with accelerating wages and prices. But in 1997, the unemployment rate sank below 5 percent and neither wage ...
... n the past few years the United States has enjoyed the unique economic duet of very low unemployment and declining price inflation. For decades, we have come to associate tight labor markets with accelerating wages and prices. But in 1997, the unemployment rate sank below 5 percent and neither wage ...
Embargoed for release at 2:00 p.m., EDT, September 18, 2013
... The lightly shaded areas represent the ranges of the projections of policymakers. The bottom of the range for each variable is the lowest of all of the projections for that year or period. Likewise, the top of the range is the highest of all of the projections for that year or period. The dark shade ...
... The lightly shaded areas represent the ranges of the projections of policymakers. The bottom of the range for each variable is the lowest of all of the projections for that year or period. Likewise, the top of the range is the highest of all of the projections for that year or period. The dark shade ...
Phillips curve
In economics, the Phillips curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result in an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run. In 1968, Milton Friedman asserted that the Phillips Curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment. Friedman then correctly predicted that, in the upcoming years after 1968, both inflation and unemployment would increase. The long-run Phillips Curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment. Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of money supply measures such as the MZM (""money zero maturity"") velocity, which is affected by unemployment in the short but not the long term.