Site MapHelpFeedbackMultiple Choice Quiz
Multiple Choice Quiz
(See related pages)

1
A reduction in the central bank's inflation target will result in:
A)An increase in potential output.
B)No change in potential output.
C)A decrease in potential output.
D)The long-run aggregate supply curve having an upward slope.
2
Which of the following would be classified as a negative supply shock?
A)An increase in the price of oil.
B)An increase in government purchases.
C)An increase in export demand.
D)Either an increase in the price of oil or an increase in government purchases.
3
Stagflation is a term that usually describes an economy experiencing:
A)Low inflation.
B)Low inflation coupled with low growth.
C)High inflation with a recessionary gap.
D)Low unemployment rates and low inflation rates.
4
If consumer and business sentiment were to increase dramatically, causing an expansionary gap:
A)Monetary policymakers could stabilize the economy by shifting their monetary policy reaction curve to the right.
B)Fiscal policymakers could stabilize aggregate demand by cutting income and business taxes.
C)Monetary policymakers would likely shift the monetary policy reaction curve to the left to shift the dynamic aggregate demand left.
D)Fiscal policymakers could stabilize aggregate demand by increasing government purchases.
5
Suppose that consumer and business confidence fall. What is the ultimate outcome for the economy if monetary policymakers respond to keep inflation on an unchanged target?
A)If monetary policymakers respond, output would remain close to potential output.
B)If monetary policymakers respond, output would fall below potential output.
C)If monetary policymakers respond, output would rise above potential output.
D)If monetary policymakers respond, output would remain close to potential output but inflation would still rise despite their actions.
6
In practice, it is difficult to keep inflation and output from fluctuating when aggregate expenditures change because:
A)It takes time for policymakers to recognize that shifts have occurred.
B)Changes in interest rates do not have an immediate impact on the economy.
C)Changes in consumer or business confidence can be very difficult to recognize as they are occurring.
D)All of the answers given are correct.
7
Unemployment insurance and the proportional nature of the tax system are examples of:
A)Discretionary fiscal policy.
B)Automatic fiscal policy.
C)Both discretionary and automatic fiscal policy.
D)Expansionary fiscal policy.
8
Tax cuts would have the same affect on the dynamic aggregate demand curve as:
A)Decreases in government purchases.
B)The Federal Reserve selling U.S. treasury securities.
C)The Federal Reserve buying U.S. treasury securities.
D)Temporary tax increases.
9
Monetary policy has the following advantage(s) over fiscal policy:
A)It is less influenced by politics.
B)It can be implemented faster.
C)It can be fine-tuned.
D)All of the answers given are correct.
10
During the Great Moderation experienced in the United States during the 1990s:
A)Output never decreased and inflation fell steadily.
B)Output and inflation both fell steadily.
C)Output and inflation both increased.
D)Output never decreased and inflation rose only slightly.
11
Disinflation occurs when:
A)The inflation rate is negative.
B)The inflation rate is 2 percent or less.
C)The inflation rate goes above ten percent.
D)The rate of inflation declines.
12
Real business cycle theory explains fluctuations in output through:
A)Changes in aggregate demand.
B)Changes in productivity.
C)Shifts of the short-run aggregate supply curve.
D)Changes in monetary policy.
13
If prices and wages are slow to adjust ("sticky", rather than flexible):
A)Inflation would adjust rapidly.
B)Output gaps would disappear quickly.
C)Inflation would adjust to output gaps sluggishly.
D)The short-run aggregate supply curve would not shift.
14
Policymakers can neutralize:
A)Supply shocks, but only in the short run.
B)Supply shocks, but only in the long run.
C)Supply shocks in both the short run and the long run.
D)Only demand shocks.
15
Monetary policymakers face a tradeoff between:
A)The level of output and the rate of inflation.
B)The volatility in output and the volatility in inflation.
C)Low unemployment and high inflation.
D)High unemployment and low inflation.





To learn more about the book this website supports, please visit its Information Center.
Copyright (c)2015 McGraw-Hill Education .
Any use is subject to the Terms of Use and Privacy Notice | Report Piracy


MBFM 4eOnline Learning Center

Home > Chapter 22 > Multiple Choice Quiz