This document contains a quiz for an economics course on new Keynesian models with sticky prices. It includes 61 true/false and multiple choice questions testing understanding of key concepts in new Keynesian models such as how monetary policy shocks affect output and employment in the short-run versus long-run, the relationship between inflation and economic activity predicted by new Keynesian models versus empirical data, and implications of models with sticky nominal wages. The quiz questions cover topics like firms' pricing and output decisions under imperfect competition, the effects of demand shocks, and labor market dynamics in new Keynesian frameworks.
South UniversityVirginia Beach CampusECO2071Name ________.docxwilliame8
South University
Virginia Beach Campus
ECO2071
Name: ____________________________________________
Score: ______________
Select the CORRECT answer to each question. Each question is worth 2 points.
1. Economics is the study of how society manages its
a.
limited wants and unlimited resources.
b.
unlimited wants and unlimited resources.
c.
limited wants and limited resources.
d.
unlimited wants and limited resources.
2. The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that
a.
equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
b.
equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
c.
equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
d.
equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.
3. Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial
a.
only if it allows us to obtain things that we couldn't make for ourselves.
b.
because it allows specialization, which increases total output.
c.
to us if we can gain and the others involved in the trade lose.
d.
in only a limited number of circumstances because others are typically self-interested.
4. A direct or positive relationship exists between a country's
a.
productivity and its standard of living.
b.
amount of government spending and its productivity.
c.
total population and its average citizen’s income.
d.
rate of population growth and the extent of its trade with other countries.
5. Economists, like mathematicians, physicists, and biologists,
a.
make use of the scientific method.
b.
try to address their subject with a scientist’s objectivity.
c.
devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
d.
All of the above are correct.
6. Which of the following is an example of a positive, as opposed to normative, statement?
a.
Inflation is more harmful to the economy than unemployment is.
b.
If welfare payments increase, the world will be a better place.
c.
Prices rise when the government prints too much money.
d.
When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.
7. Which of the following is an example of a normative, as opposed to positive, statement?
a.
Universal health care would be good for U.S. citizens.
b.
An increase in the cigarette tax would cause a decrease in the number of smokers.
c.
A decrease in the minimum wage would decrease unemployment.
d.
A law requiri.
Exam1. Economics is aa. social science that studies g.docxSANSKAR20
Exam
1. Economics is a:
a. social science that studies goods with no alternative uses.
b. natural science that studies goods with no alternative uses.
c. social science concerned chiefly with how people choose among alternatives.
d. social science concerned chiefly with reasons why society has unlimited resources.
2. Scarcity exists when:
a. a choice must be made among two or more alternatives.
b. we face the notion of "all other things unchanged."
c. countries and people find themselves facing poverty.
d. the notions of normative economics come into play.
3. A free good is:
a. also a scarce good.
b. a relatively abundant good.
c. a good with no opportunity cost.
d. a good with relatively low opportunity cost.
4. Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:
a. How will each good be produced?
b. For whom shall the goods be produced?
c. Why will the resources be used to produce goods?
d. What goods and services should a society produce?
5. A factor of production that has been produced for use in the production of other goods and services is:
a. labor.
b. money.
c. capital.
d. natural resources.
6. The textbook classifies technology as _______ and entrepreneurs as _______ .
a. knowledge; persons who seek profit by finding new ways to organize factors of production
b. capital; labor
c. labor skills; capital
d. a factor of production; a factor of production
7. The production possibilities curve represents the fact that:
a. the economy will automatically end up at full employment.
b. an economy's productive capacity increases proportionally with its population.
c. if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
d. economic production possibilities have no limit.
8. An economy is said to have a comparative advantage in producing a particular good if it:
a. can produce more of all goods than another economy.
b. can produce less of all goods than another economy.
c. has the highest cost for producing that good.
d. has the lowest cost for producing that good.
9. A negative relationship between the quantity demanded and price is called the law of ______.
a. demand
b. diminishing marginal returns
c. market clearing
d. supply
10. If people demand more of product A when the price of B falls, then A and B are:
a. not related.
b. substitutes.
c. complements.
d. inferior.
11. The primary difference between a change in demand and a change in the quantity demanded is:
a. a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve.
b. a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
c. both a change i ...
A graph…….a.can be used to show either a positive or neg.docxssuser774ad41
A graph…….
a.
can be used to show either a positive or negative relationship between two variables.
b.
can illustrate both demand and supply.
c.
is used because it is impossible to describe any economic relationship verbally.
d.
all of the above.
e.
both a) and b) are correct.
2.
If less people buy coffee as income declines, then coffee is
a.
a complementary good.
b.
a substitute good.
c.
a normal good.
d.
an inferior good.
3.
Consider that when the price of a good increases, like hamburgers people buy less of that good and less of a complementary good such as ketchup.
Therefore if the price of hamburgers increases,
the quantity demanded of hamburgers will decrease and the demand curve for
ketchup will shift to the left.
the quantity demanded of hamburgers will increase and the demand curve for
ketchup will shift to the left.
the quantity demanded of hamburgers will decrease and the demand curve for
ketchup will shift to the right.
the quantity demanded of hamburgers will increase and the demand curve for ketchup will shift to the right.
4.
If insurance companies are compelled by law to decrease their rates 5% for high-risk drivers, what would be the most likely outcome for high-risk drivers according to supply and demand analysis?
a.
High-risk drivers will be better off since there will be an increase in the supply for insurance.
b.
High-risk drivers will be better off since there will be an increase in the demand for insurance.
c.
Many high-risk drivers may be unable to purchase insurance since the likely outcome of the law may be to cause a shortage of insurance for high-risk drivers.
d.
both b) and c) are correct.
5.
Which of the following forecasts for revenue are correct when the price of x declines?
a.
increased revenue in the price elastic case and decreased revenue in the price inelastic case
b.
decreased revenue in the price elastic case and increased revenue in the price inelastic case
c.
increase in revenue no matter what the elasticity coefficient is
d.
decrease in revenue no matter what the elasticity coefficient is
6.
The demand for food is likely to be more
than the demand for meat.
The relates to the elasticity determinant of
________.
a.
elastic – price relative to income
b.
inelastic – price relative to income
c.
elastic – number of substitutes
d.
inelastic – number of substitutes
7.
If you enjoyed wine so much that the more you had, the better it tasted, then the marginal utility of additional wine would be
a.
positive and declining
b.
negative
c.
zero
d.
increasing
8.
If the demand for corn shifts to the right, it may have been caused by
a.
the price of corn declining.
b.
more people needing corn for recipes.
c.
the price of corn increasing.
d.
both a) and b) are correct.
9.
The paradox of value suggests that one will pay
a. more for water than diamonds.
b. more for a luxury cruise than water.
c. more for .
PAGE 4Multiple-Choice Questions1. The difference betwee.docxalfred4lewis58146
PAGE
4
Multiple-Choice Questions
1. The difference between the short-run and the long-run production function is:
a. three months or one business quarter.
b. the time it takes for firms to change all production inputs.
c. the time it takes for firms to change only their variable inputs.
d. more information is required to answer this question.
2. Which of the following statements about the short-run production function is true?
a. MP always equals AP at the maximum point of MP.
b. MP always equals zero when TP is at its maximum.
c. TP starts to decline at the point of diminishing returns.
d. When MP diminishes, AP is at its minimum point.
e. None of the above is true.
3. Assume a firm employs 10 workers and pays each $15 per hour. Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4. According to economic theory, in the short run
a. the firm should hire additional workers
b. the firm should reduce the number of workers employed
c. the firm should continue to employ 10 workers.
d. more information is required to answer this question.
4. A firm using two inputs, X and Y, is using them in the most efficient manner when
a. MPX = MPY
b. PX = PY and MPX = MPY
c. MPX/PY = MPY/PX
d. MPX/MPY = PX/PY
5. Average fixed cost is
a. AC minus AVC
b. TC divided by Q
c. AVC minus MC
d. TC minus TVC
6. Diseconomies of scale can be caused by
a. the law of diminishing returns.
b. bureaucratic inefficiencies.
c. increasing advertising and promotional costs.
d. all of the above.
7. Which of the following cost relationship is not true?
a. AFC = AC - MC
b. TVC = TC - TFC
c. the change in TVC divided by the change in Q = MC
d. the change in TC divided by the change in Q = MC
8. When a firm produces at the point where MR = MC, and the price of its product is higher that the cost per unit, the profit that it is earning is considered to be
a. maximum
b. normal
c. above normal
d. below normal
9. Which of the following is not characteristic of perfect competition?
a. A differentiated product
b. No barriers to entry
c. Large number of buyers
d. Complete knowledge of market price
10. Suppose a firm is currently maximizing its profits (i.e., following the MR = MC rule). Assuming that it wants to continue maximizing its profits, if its fixed costs increase, it should
a. maintain the same price
b. raise its price
c. lower its price
d. not enough information to answer this question
11. Which of the following is true about a monopoly?
a. Its demand curve is generally less elastic than in more competitive markets.
b. It will always earn economic profit.
c. It will charge the highest possible price.
d. It will always be subject to government regulations.
12. If an oligopolistic firm decides to raise its price,
a. other firms will automatically follow.
b. none of the other firms will follow.
c. other firms may follow if it is the price leader.
d. None of the above.
13.
1. The law of demand implies that sellers will offer .docxkarisariddell
1. The law of demand implies that:
sellers will offer less on the market at lower prices.
consumers will buy more at lower prices.
sellers will offer more on the market at higher prices.
consumers are not responsive to price changes.
2. An increase in the demand for gasoline today caused by concerns that gasoline prices will be
higher tomorrow is most likely attributable to a change in:
consumer preferences.
consumer expectations.
income.
prices of other goods.
3. If the price of hamburger decreased, it would probably result in _____ in the demand for
hamburger buns.
random fluctuations
no change
an increase
a decrease
4. A decrease in supply is caused by:
an advancement in the technology for producing the good.
an increase in the price of goods that are used in production.
an increase in the number of producers.
suppliers' expectations of lower prices in the future.
5. Figure: The Demand and Supply of Wheat
Reference: Ref 3-6
(Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of
Wheat. If a price of $8 temporarily exists in this market, a _____ of _____ bushels will
result.
surplus; 6,000
surplus; 4,000
shortage; 2,000
shortage; 4,000
6. If the market for buffalo meat is in equilibrium, the price of buffalo meat will probably
_____ in the near future.
decrease
increase considerably
increase
not change
7. Figure: Four Markets for DVDs
Reference: Ref 3-9
(Figure: Four Markets for DVDs) Look at the figure Four Markets for DVDs. Which of the
graphs illustrates what may happen in the market for DVDs if D1 or S1 is the original curve
and D2 or S2 is the new curve and if the cost of producing DVDs falls?
C
D
A
B
8. Figure: Shifts in Demand and Supply II
Reference: Ref 3-11
(Figure: Shifts in Demand and Supply II) Look at the figure Shifts in Demand and Supply II.
The graph shows how supply and demand might shift in response to specific events. Suppose
scientists discover that eating pomegranates causes aging. Which panel BEST describes how
this will affect the market for pomegranates?
panel C
panel B
panel D
panel A
9. Figure: Shifts in Demand and Supply III
Reference: Ref 3-12
(Figure: Shifts in Demand and Supply III) Look at the figure Shifts in Demand and Supply
III. The figure shows how supply and demand might shift in response to specific events.
Suppose consumer incomes increase. Which panel BEST describes how this will affect the
market for designer boots, a normal good?
panel B
panel C
panel A
panel D
10. For consumers, pizza and hamburgers are substitutes. A rise in the price of a pizza causes
_____ in the equilibrium price of a hamburger and _____ in the equilibrium quantity of
hamburgers.
a rise; a decrease
a fall; an increase
a rise; an increase
a fall; a decrease .
1.The tax multiplier associated with a $10B reduction in t.docxelliotkimberlee
1.
The tax multiplier associated with a $10B reduction in taxes is _______ the spending multiplier associated with a $10B increase in government spending because __________
a.
the same quantity as / a tax change will either put more income into or out of savings
b.
smaller than / a tax change also involves a change in savings in the first round of spending
c.
larger than / taxes cause more discretionary income to be spent whether it is a tax increase or a tax decrease
d.
smaller than / the tax multiplier is usually very unstable
2.
Each year the Tax Foundation calculates the day of the year the average income earner has to work in order to pay taxes.
This is known as Tax Freedom Day.
Last year’s date, April 26, was three days later than the previous year’s.
The Tax Foundation says this is because of economic growth leading to higher incomes and higher taxes.
This observation makes sense since our income tax system is progressive and therefore ___________.
This is also consistent with ____________.
a.
takes a higher percent of income, the greater one’s income – how automatic stabilizers work
b.
takes a lower percent of income, the greater one’s income – how automatic stabilizers work
c.
takes a higher percent of income, the greater one’s income – the discretionary tools of fiscal policy
d.
takes a lower percent of income, the greater one’s income – monetary policy
3.
A house is a ______________ asset, and therefore this means that it takes ________ to recover its true value in the marketplace.
a.
liquid
-- much time
b.
non-liquid
-- much time
c.
liquid – very little time
d.
non-liquid
-- very little time
4
."An increase in national income increases aggregate demand more than the initial increase in spending."
The preceding statement describes
a.
microeconomic supply and demand curves.
b.
macroeconomic supply and demand curves.
c.
the spending multiplier.
d.
the money multiplier.
e.
both c) and d) are correct.
5.
If the Fed buys $1,000 worth of bonds and the banking multiplier is 8, then
a.
the reserve ratio is 12.5 percent.
b.
the potential money supply increase is greater than $1,000.
c.
there must also be a government spending increase or the Fed would not be buying the bonds.
d.
all of the above.
e.
both a) and b) are correct.
6.
Both fiscal and monetary policy affect the money supply.
a.
true
b.
false
7.
The Fed is considered "autonomous."
In practice this means the Board of Governors
a.
run for reelection every 4 years.
b.
are more insulated from the wishes of the voters than Congress.
c.
are less insulated from the wishes of the voters than Congress.
d.
can do whatever they please since they have lifetime appointments.
8.
Which of the policy combinations given below would consistently work in the direction of decreasing the rate of growth of the money supply?
a.
Raise the discount rate, lower the reserve requirement and engage in open mar.
South UniversityVirginia Beach CampusECO2071Name ________.docxwilliame8
South University
Virginia Beach Campus
ECO2071
Name: ____________________________________________
Score: ______________
Select the CORRECT answer to each question. Each question is worth 2 points.
1. Economics is the study of how society manages its
a.
limited wants and unlimited resources.
b.
unlimited wants and unlimited resources.
c.
limited wants and limited resources.
d.
unlimited wants and limited resources.
2. The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that
a.
equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
b.
equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
c.
equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
d.
equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.
3. Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial
a.
only if it allows us to obtain things that we couldn't make for ourselves.
b.
because it allows specialization, which increases total output.
c.
to us if we can gain and the others involved in the trade lose.
d.
in only a limited number of circumstances because others are typically self-interested.
4. A direct or positive relationship exists between a country's
a.
productivity and its standard of living.
b.
amount of government spending and its productivity.
c.
total population and its average citizen’s income.
d.
rate of population growth and the extent of its trade with other countries.
5. Economists, like mathematicians, physicists, and biologists,
a.
make use of the scientific method.
b.
try to address their subject with a scientist’s objectivity.
c.
devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
d.
All of the above are correct.
6. Which of the following is an example of a positive, as opposed to normative, statement?
a.
Inflation is more harmful to the economy than unemployment is.
b.
If welfare payments increase, the world will be a better place.
c.
Prices rise when the government prints too much money.
d.
When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.
7. Which of the following is an example of a normative, as opposed to positive, statement?
a.
Universal health care would be good for U.S. citizens.
b.
An increase in the cigarette tax would cause a decrease in the number of smokers.
c.
A decrease in the minimum wage would decrease unemployment.
d.
A law requiri.
Exam1. Economics is aa. social science that studies g.docxSANSKAR20
Exam
1. Economics is a:
a. social science that studies goods with no alternative uses.
b. natural science that studies goods with no alternative uses.
c. social science concerned chiefly with how people choose among alternatives.
d. social science concerned chiefly with reasons why society has unlimited resources.
2. Scarcity exists when:
a. a choice must be made among two or more alternatives.
b. we face the notion of "all other things unchanged."
c. countries and people find themselves facing poverty.
d. the notions of normative economics come into play.
3. A free good is:
a. also a scarce good.
b. a relatively abundant good.
c. a good with no opportunity cost.
d. a good with relatively low opportunity cost.
4. Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:
a. How will each good be produced?
b. For whom shall the goods be produced?
c. Why will the resources be used to produce goods?
d. What goods and services should a society produce?
5. A factor of production that has been produced for use in the production of other goods and services is:
a. labor.
b. money.
c. capital.
d. natural resources.
6. The textbook classifies technology as _______ and entrepreneurs as _______ .
a. knowledge; persons who seek profit by finding new ways to organize factors of production
b. capital; labor
c. labor skills; capital
d. a factor of production; a factor of production
7. The production possibilities curve represents the fact that:
a. the economy will automatically end up at full employment.
b. an economy's productive capacity increases proportionally with its population.
c. if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
d. economic production possibilities have no limit.
8. An economy is said to have a comparative advantage in producing a particular good if it:
a. can produce more of all goods than another economy.
b. can produce less of all goods than another economy.
c. has the highest cost for producing that good.
d. has the lowest cost for producing that good.
9. A negative relationship between the quantity demanded and price is called the law of ______.
a. demand
b. diminishing marginal returns
c. market clearing
d. supply
10. If people demand more of product A when the price of B falls, then A and B are:
a. not related.
b. substitutes.
c. complements.
d. inferior.
11. The primary difference between a change in demand and a change in the quantity demanded is:
a. a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve.
b. a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
c. both a change i ...
A graph…….a.can be used to show either a positive or neg.docxssuser774ad41
A graph…….
a.
can be used to show either a positive or negative relationship between two variables.
b.
can illustrate both demand and supply.
c.
is used because it is impossible to describe any economic relationship verbally.
d.
all of the above.
e.
both a) and b) are correct.
2.
If less people buy coffee as income declines, then coffee is
a.
a complementary good.
b.
a substitute good.
c.
a normal good.
d.
an inferior good.
3.
Consider that when the price of a good increases, like hamburgers people buy less of that good and less of a complementary good such as ketchup.
Therefore if the price of hamburgers increases,
the quantity demanded of hamburgers will decrease and the demand curve for
ketchup will shift to the left.
the quantity demanded of hamburgers will increase and the demand curve for
ketchup will shift to the left.
the quantity demanded of hamburgers will decrease and the demand curve for
ketchup will shift to the right.
the quantity demanded of hamburgers will increase and the demand curve for ketchup will shift to the right.
4.
If insurance companies are compelled by law to decrease their rates 5% for high-risk drivers, what would be the most likely outcome for high-risk drivers according to supply and demand analysis?
a.
High-risk drivers will be better off since there will be an increase in the supply for insurance.
b.
High-risk drivers will be better off since there will be an increase in the demand for insurance.
c.
Many high-risk drivers may be unable to purchase insurance since the likely outcome of the law may be to cause a shortage of insurance for high-risk drivers.
d.
both b) and c) are correct.
5.
Which of the following forecasts for revenue are correct when the price of x declines?
a.
increased revenue in the price elastic case and decreased revenue in the price inelastic case
b.
decreased revenue in the price elastic case and increased revenue in the price inelastic case
c.
increase in revenue no matter what the elasticity coefficient is
d.
decrease in revenue no matter what the elasticity coefficient is
6.
The demand for food is likely to be more
than the demand for meat.
The relates to the elasticity determinant of
________.
a.
elastic – price relative to income
b.
inelastic – price relative to income
c.
elastic – number of substitutes
d.
inelastic – number of substitutes
7.
If you enjoyed wine so much that the more you had, the better it tasted, then the marginal utility of additional wine would be
a.
positive and declining
b.
negative
c.
zero
d.
increasing
8.
If the demand for corn shifts to the right, it may have been caused by
a.
the price of corn declining.
b.
more people needing corn for recipes.
c.
the price of corn increasing.
d.
both a) and b) are correct.
9.
The paradox of value suggests that one will pay
a. more for water than diamonds.
b. more for a luxury cruise than water.
c. more for .
PAGE 4Multiple-Choice Questions1. The difference betwee.docxalfred4lewis58146
PAGE
4
Multiple-Choice Questions
1. The difference between the short-run and the long-run production function is:
a. three months or one business quarter.
b. the time it takes for firms to change all production inputs.
c. the time it takes for firms to change only their variable inputs.
d. more information is required to answer this question.
2. Which of the following statements about the short-run production function is true?
a. MP always equals AP at the maximum point of MP.
b. MP always equals zero when TP is at its maximum.
c. TP starts to decline at the point of diminishing returns.
d. When MP diminishes, AP is at its minimum point.
e. None of the above is true.
3. Assume a firm employs 10 workers and pays each $15 per hour. Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4. According to economic theory, in the short run
a. the firm should hire additional workers
b. the firm should reduce the number of workers employed
c. the firm should continue to employ 10 workers.
d. more information is required to answer this question.
4. A firm using two inputs, X and Y, is using them in the most efficient manner when
a. MPX = MPY
b. PX = PY and MPX = MPY
c. MPX/PY = MPY/PX
d. MPX/MPY = PX/PY
5. Average fixed cost is
a. AC minus AVC
b. TC divided by Q
c. AVC minus MC
d. TC minus TVC
6. Diseconomies of scale can be caused by
a. the law of diminishing returns.
b. bureaucratic inefficiencies.
c. increasing advertising and promotional costs.
d. all of the above.
7. Which of the following cost relationship is not true?
a. AFC = AC - MC
b. TVC = TC - TFC
c. the change in TVC divided by the change in Q = MC
d. the change in TC divided by the change in Q = MC
8. When a firm produces at the point where MR = MC, and the price of its product is higher that the cost per unit, the profit that it is earning is considered to be
a. maximum
b. normal
c. above normal
d. below normal
9. Which of the following is not characteristic of perfect competition?
a. A differentiated product
b. No barriers to entry
c. Large number of buyers
d. Complete knowledge of market price
10. Suppose a firm is currently maximizing its profits (i.e., following the MR = MC rule). Assuming that it wants to continue maximizing its profits, if its fixed costs increase, it should
a. maintain the same price
b. raise its price
c. lower its price
d. not enough information to answer this question
11. Which of the following is true about a monopoly?
a. Its demand curve is generally less elastic than in more competitive markets.
b. It will always earn economic profit.
c. It will charge the highest possible price.
d. It will always be subject to government regulations.
12. If an oligopolistic firm decides to raise its price,
a. other firms will automatically follow.
b. none of the other firms will follow.
c. other firms may follow if it is the price leader.
d. None of the above.
13.
1. The law of demand implies that sellers will offer .docxkarisariddell
1. The law of demand implies that:
sellers will offer less on the market at lower prices.
consumers will buy more at lower prices.
sellers will offer more on the market at higher prices.
consumers are not responsive to price changes.
2. An increase in the demand for gasoline today caused by concerns that gasoline prices will be
higher tomorrow is most likely attributable to a change in:
consumer preferences.
consumer expectations.
income.
prices of other goods.
3. If the price of hamburger decreased, it would probably result in _____ in the demand for
hamburger buns.
random fluctuations
no change
an increase
a decrease
4. A decrease in supply is caused by:
an advancement in the technology for producing the good.
an increase in the price of goods that are used in production.
an increase in the number of producers.
suppliers' expectations of lower prices in the future.
5. Figure: The Demand and Supply of Wheat
Reference: Ref 3-6
(Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of
Wheat. If a price of $8 temporarily exists in this market, a _____ of _____ bushels will
result.
surplus; 6,000
surplus; 4,000
shortage; 2,000
shortage; 4,000
6. If the market for buffalo meat is in equilibrium, the price of buffalo meat will probably
_____ in the near future.
decrease
increase considerably
increase
not change
7. Figure: Four Markets for DVDs
Reference: Ref 3-9
(Figure: Four Markets for DVDs) Look at the figure Four Markets for DVDs. Which of the
graphs illustrates what may happen in the market for DVDs if D1 or S1 is the original curve
and D2 or S2 is the new curve and if the cost of producing DVDs falls?
C
D
A
B
8. Figure: Shifts in Demand and Supply II
Reference: Ref 3-11
(Figure: Shifts in Demand and Supply II) Look at the figure Shifts in Demand and Supply II.
The graph shows how supply and demand might shift in response to specific events. Suppose
scientists discover that eating pomegranates causes aging. Which panel BEST describes how
this will affect the market for pomegranates?
panel C
panel B
panel D
panel A
9. Figure: Shifts in Demand and Supply III
Reference: Ref 3-12
(Figure: Shifts in Demand and Supply III) Look at the figure Shifts in Demand and Supply
III. The figure shows how supply and demand might shift in response to specific events.
Suppose consumer incomes increase. Which panel BEST describes how this will affect the
market for designer boots, a normal good?
panel B
panel C
panel A
panel D
10. For consumers, pizza and hamburgers are substitutes. A rise in the price of a pizza causes
_____ in the equilibrium price of a hamburger and _____ in the equilibrium quantity of
hamburgers.
a rise; a decrease
a fall; an increase
a rise; an increase
a fall; a decrease .
1.The tax multiplier associated with a $10B reduction in t.docxelliotkimberlee
1.
The tax multiplier associated with a $10B reduction in taxes is _______ the spending multiplier associated with a $10B increase in government spending because __________
a.
the same quantity as / a tax change will either put more income into or out of savings
b.
smaller than / a tax change also involves a change in savings in the first round of spending
c.
larger than / taxes cause more discretionary income to be spent whether it is a tax increase or a tax decrease
d.
smaller than / the tax multiplier is usually very unstable
2.
Each year the Tax Foundation calculates the day of the year the average income earner has to work in order to pay taxes.
This is known as Tax Freedom Day.
Last year’s date, April 26, was three days later than the previous year’s.
The Tax Foundation says this is because of economic growth leading to higher incomes and higher taxes.
This observation makes sense since our income tax system is progressive and therefore ___________.
This is also consistent with ____________.
a.
takes a higher percent of income, the greater one’s income – how automatic stabilizers work
b.
takes a lower percent of income, the greater one’s income – how automatic stabilizers work
c.
takes a higher percent of income, the greater one’s income – the discretionary tools of fiscal policy
d.
takes a lower percent of income, the greater one’s income – monetary policy
3.
A house is a ______________ asset, and therefore this means that it takes ________ to recover its true value in the marketplace.
a.
liquid
-- much time
b.
non-liquid
-- much time
c.
liquid – very little time
d.
non-liquid
-- very little time
4
."An increase in national income increases aggregate demand more than the initial increase in spending."
The preceding statement describes
a.
microeconomic supply and demand curves.
b.
macroeconomic supply and demand curves.
c.
the spending multiplier.
d.
the money multiplier.
e.
both c) and d) are correct.
5.
If the Fed buys $1,000 worth of bonds and the banking multiplier is 8, then
a.
the reserve ratio is 12.5 percent.
b.
the potential money supply increase is greater than $1,000.
c.
there must also be a government spending increase or the Fed would not be buying the bonds.
d.
all of the above.
e.
both a) and b) are correct.
6.
Both fiscal and monetary policy affect the money supply.
a.
true
b.
false
7.
The Fed is considered "autonomous."
In practice this means the Board of Governors
a.
run for reelection every 4 years.
b.
are more insulated from the wishes of the voters than Congress.
c.
are less insulated from the wishes of the voters than Congress.
d.
can do whatever they please since they have lifetime appointments.
8.
Which of the policy combinations given below would consistently work in the direction of decreasing the rate of growth of the money supply?
a.
Raise the discount rate, lower the reserve requirement and engage in open mar.
1.The tax multiplier associated with a $10B reduction in taxes i.docxhyacinthshackley2629
1.
The tax multiplier associated with a $10B reduction in taxes is _______ the spending multiplier associated with a $10B increase in government spending because __________
a.
the same quantity as / a tax change will either put more income into or out of savings
b.
smaller than / a tax change also involves a change in savings in the first round of spending
c.
larger than / taxes cause more discretionary income to be spent whether it is a tax increase or a tax decrease
d.
smaller than / the tax multiplier is usually very unstable
2.
Each year the Tax Foundation calculates the day of the year the average income earner has to work in order to pay taxes. This is known as Tax Freedom Day. Last year’s date, April 26, was three days later than the previous year’s. The Tax Foundation says this is because of economic growth leading to higher incomes and higher taxes.
This observation makes sense since our income tax system is progressive and therefore ___________. This is also consistent with ____________.
a.
takes a higher percent of income, the greater one’s income – how automatic stabilizers work
b.
takes a lower percent of income, the greater one’s income – how automatic stabilizers work
c.
takes a higher percent of income, the greater one’s income – the discretionary tools of fiscal policy
d.
takes a lower percent of income, the greater one’s income – monetary policy
3.
A house is a ______________ asset, and therefore this means that it takes ________ to recover its true value in the marketplace.
a.
liquid -- much time
b.
non-liquid -- much time
c.
liquid – very little time
d.
non-liquid -- very little time
4
."An increase in national income increases aggregate demand more than the initial increase in spending." The preceding statement describes
a.
microeconomic supply and demand curves.
b.
macroeconomic supply and demand curves.
c.
the spending multiplier.
d.
the money multiplier.
e.
both c) and d) are correct.
5.
If the Fed buys $1,000 worth of bonds and the banking multiplier is 8, then
a.
the reserve ratio is 12.5 percent.
b.
the potential money supply increase is greater than $1,000.
c.
there must also be a government spending increase or the Fed would not be buying the bonds.
d.
all of the above.
e.
both a) and b) are correct.
6.
Both fiscal and monetary policy affect the money supply.
a.
true
b.
false
7.
The Fed is considered "autonomous." In practice this means the Board of Governors
a.
run for reelection every 4 years.
b.
are more insulated from the wishes of the voters than Congress.
c.
are less insulated from the wishes of the voters than Congress.
d.
can do whatever they please since they have lifetime appointments.
8.
Which of the policy combinations given below would consistently work in the direction of decreasing the rate of growth of the money supply?
a.
Raise the discount rate, lower the reserve requirement and engage in open market sales.
b.
Lower the discount rate, lower the res.
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
how to swap pi coins to foreign currency withdrawable.DOT TECH
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Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfcoingabbar
Introducing BONKMILLON - The Most Bonkers Meme Coin Yet
Let's be real for a second – the world of meme coins can feel like a bit of a circus at times. Every other day, there's a new token promising to take you "to the moon" or offering some groundbreaking utility that'll change the game forever. But how many of them actually deliver on that hype?
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just what'sapp this number below. I sold about 3000 pi coins to him and he paid me immediately.
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How Non-Banking Financial Companies Empower Startups With Venture Debt Financing
Eco 302 week 10 quiz strayer
1. ECO 302 Week 10 Quiz - Strayer
Click on The Link Below to Purchase A+ Graded Course Material
http://budapp.net/ECO-302-Week-10-Quiz-Strayer-357.htm
Quiz Chapter 16
TRUE/FALSE
1. A model with sticky prices and nominal wages is a disequilibrium
model.
2. Menu costs are the posted prices of a firm.
3. In the short run in a model with sticky prices, a monetary surprise
affects labor demand and real output.
4. In the long run in a model with sticky prices, a monetary surprise
affects labor demand and real output.
5. A new Keynesian model produces a countercyclical pattern of the
average product of labor while in the data the average product of labor is weakly
procyclical.
6. In the new Keynesian model, an increase in household consumption
will increase output by more than the original increase in consumption.
7. In the new Keynesian model, a monetary expansion will decrease
output in the short run.
8. In a model with imperfect competition, a firm will set its price equal to
its nominal marginal cost.
2. 9. In the Keynesian model with sticky nominal wages, the nominal wage
rate is fixed above its market-clearing value.
10. In the Keynesian model with sticky nominal wages, a monetary
expansion does not affect the real wage rate.
11. The Federal Funds rate is determined in the market for bonds issued by
the U.S. Treasury.
MULTIPLE CHOICE
1. Menu costs are:
a. the posted prices of a firm. c. are set by the government.
b. the costs of changing prices. d. are the long run costs of the firm.
2. Sticky prices are:
a. real prices that do not rapidly respond to changed circumstances. c.
nominal prices that do not rapidly respond to changed circumstances.
b. prices set by government. d. prices that can never be changed.
3. In the model of price setting, the demand for the firms product is:
a. positively related to real income in the economy. c. negatively related
to the real wage the firm pays.
b. positively related to the firms price relative to the price level. d. all
of the above.
4. In the model of price setting, the demand for the firms product is:
a. negatively related to real income in the economy. c. negatively related
to the real wage the firm pays.
b. negatively to the firms price relative to the price level. d. all of the
above.
3. 5. A firm’s markup ratio is:
a. its price relative to the price level. c. it price relative to its marginal
costs.
b. the price level relative to its marginal costs. d. its marginal cost relative
to the price level.
6. In the model of price setting, the demand for the firm’s price is:
a. positively related to the markup ratio. c. negatively related to the
firm’s marginal product of labor.
b. positively related to the nominal wage the firm pays. d. all of the
above.
7. In the model of price setting, the demand for the firm’s price is:
a. positively related to the markup ratio. c. positively related to the
firm’s marginal product of labor.
b. negatively related to the nominal wage the firm pays. d. all of the
above.
8. In the model of price setting, the demand for the firm’s price is:
a. negatively related to the markup ratio. c. positively related to the
firm’s marginal product of labor.
b. positively related to the nominal wage the firm pays. d. all of the
above.
9. In the model of price setting, the demand for the firm’s price is:
a. negatively related to the markup ratio. c. negatively related to the
firm’s marginal product of labor.
b. negatively related to the nominal wage the firm pays. d. all of the
above.
10. In the model with sticky prices, in the short run a positive monetary
shock leads to:
a. an increase in household real money balances. c. no change in
household’s desired real money balances.
b. an increase in household’s demand for goods. d. all of the above.
4. 11. In the model with sticky prices, in the short run a positive monetary
shock leads to:
a. an increase in household real money balances. c. an increase in
house hold’s desired real money balances.
b. a decrease in household’s demand for goods.d. all of the above.
12. In the model with sticky prices, in the short run a positive monetary
shock leads to:
a. a decrease in household real money balances. c. a decrease in
household’s desired real money balances.
b. an increase in household’s demand for goods. d. all of the above.
13. In the model with sticky prices, in the short run a positive monetary
shock leads to:
a. a decrease in household real money balances. c. no change in
household’s desired real money balances.
b. a decrease in household’s demand for goods. d. all of the above.
14. In a model with sticky prices, a positive monetary shock would cause
households:
a. to spend more to try to get rid of the excess money. c. to change optimal
real money balances.
b. to want to hold more money. d. all of the above.
15. In the model with sticky prices, in the short run a positive monetary
shock leads to:
a. an increased supply of labor. c. a higher marginal product of labor.
b. an increased demand for labor. d. all of the above.
16. In the short run with a model with sticky prices a positive monetary
surprise:
5. a. increases labor demand. c. increases the real wage.
b. increases real output. d. all of the above.
17. In the short run with a model with sticky prices a positive monetary
surprise:
a. increases labor demand. c. leaves the real wage unchanged.
b. decreases real output. d. all of the above.
18. In the short run with a model with sticky prices a positive monetary
surprise:
a. decreases labor demand. c. leaves the real wage unchanged.
b. increases real output. d. all of the above.
19. In the short run with a model with sticky prices a positive monetary
surprise:
a. decreases labor demand. c. increases the real wage.
b. decreases real output. d. all of the above.
20. In the short run with a model with sticky prices a negative monetary
surprise:
a. decreases labor demand. c. decreases the real wage.
b. decreases real output. d. all of the above.
21. In the short run with a model with sticky prices a negative monetary
surprise:
a. decreases labor demand. c. increases the real wage.
b. increases real output. d. all of the above.
22. In the short run with a model with sticky prices a negative monetary
surprise:
a. increases labor demand. c. increases the real wage.
b. decreases real output. d. all of the above.
6. 23. In the short run with a model with sticky prices a negative monetary
surprise:
a. increases labor demand. c. decreases the real wage.
b. increases real output. d. all of the above.
24. In the short run in a model with sticky prices:
a. the labor input is procyclical. c. the real wage rate in procyclical.
b. the average product of labor is countercyclical. d. all of the above.
25. In the short run in a model with sticky prices:
a. the labor input is procyclical. c. the real wage rate in countercyclical.
b. the average product of labor is procyclical. d. all of the above.
26. In the short run in a model with sticky prices:
a. the labor input is countercyclical. c. the real wage rate in
countercyclical.
b. the average product of labor is countercyclical. d. all of the above.
27. In the short run in a model with sticky prices:
a. the labor input is countercyclical. c. the real wage rate in procyclical.
b. the average product of labor is procyclical. d. all of the above.
28. In the long run in a model with sticky prices:
a. prices will adjust. c. increase in prices reverse the short run effects.
b. money is neutral. d. all of the above.
29. In the long run in a model with sticky prices:
a. prices will adjust. c. the short run effects persist.
7. b. money still affects output. d. all of the above.
30. In the long run in a model with sticky prices:
a. prices remain sticky. c. the short run effects persist.
b. money is neutral. d. all of the above.
31. In the long run in a model with sticky prices:
a. prices remain sticky. c. increase in prices reverse the short run effects.
b. money affects production. d. all of the above.
32. In a new Keynesian model:
a. money is procyclical and money is weakly procyclical in the data. c. the
average product of labor is countercyclical while the average product of labor is
weakly procyclical in the data.
b. the price level is countercyclical and the price level is countercyclical in the
data. d. all of the above.
33. In a new Keynesian model:
a. money is procyclical and money is weakly procyclical in the data. c. the
average product of labor is procyclical while the average product of labor is
countercyclical in the data.
b. the price level is procyclical and the price level is procyclical in the data. d.
all of the above.
34. In a new Keynesian model:
a. money is countercyclical and money is weakly countercyclical in the data. c.
the average product of labor is procyclical while the average product of labor
is countercyclical in the data.
b. the price level is countercyclical and the price level is countercyclical in the
data. d. all of the above.
35. In new Keynesian model:
8. a. money is countercyclical and money is weakly countercyclical in the data. c.
the average product of labor is countercyclical while the average product of
labor is weakly procyclical in the data.
b. the price level is procyclical and the price level is procyclical in the data. d.
all of the above.
36. In a new Keynesian model an increase in aggregate demand causes:
a. an increase in real production greater than the increase in aggregate demand.
c. an increase in real production less than the increase in aggregate
demand.
b. an increase in real production equal to increase in aggregate demand. d.
a decrease in real production.
37. In a new Keynesian model a temporary increase in output could be
cause by:
a. a positive monetary surprise. c. a positive shock to government
purchases.
b. households becoming exogenously more thrifty. d. all of the above.
38. In a new Keynesian model a temporary increase in output could be
cause by:
a. a positive monetary surprise. c. a negative shock to government
purchases.
b. households becoming exogenously less thrifty. d. all of the above.
39. In a new Keynesian model a temporary increase in output could be
cause by:
a. a negative monetary surprise. c. a negative shock to government
purchases.
b. households becoming exogenously more thrifty. d. all of the above.
40. In a new Keynesian model a temporary increase in output could be
cause by:
a. a negative monetary surprise. c. a positive shock to government
purchases.
9. b. households becoming exogenously less thrifty. d. all of the above.
41. In the short run in a new Keynesian model an increase in money
means:
a. the price level must rise. c. the interest rate must rise.
b. real GDP must rise. d. all of the above.
42. In the short run in a new Keynesian model an increase in money
means:
a. the price level must rise. c. the interest rate must fall.
b. real GDP must fall. d. all of the above.
43. Unlike the price misperception model the new Keynesian models finds
that:
a. the price level is countercyclical as the data show. c. the price level is
procyclical as the data show.
b. the price level is countercyclical while the data show it is procyclical. d.
the price level is procyclical as the data show it is countercyclical.
44. In a model with sticky nominal wages an increase in the money supply
will:
a. lower the real wage. c. increase the labor input.
b. increase real output. d. all of the above.
45. In a model with sticky nominal wages an increase in the money supply
will:
a. lower the real wage. c. decrease the labor input.
b. decrease real output. d. all of the above.
46. In a model with sticky nominal wages an increase in the money supply
will:
a. raise the real wage. c. decrease the labor input.
10. b. increase real output. d. all of the above.
47. In a model with sticky nominal wages an increase in the money supply
will:
a. raise the real wage. c. increase the labor input.
b. decrease real output. d. all of the above.
48. A result of a model with sticky nominal wages is:
a. voluntary unemployment in the short run. c. money being
countercyclical while in the data money is weakly procyclical.
b. a countercyclical real wage while in the data the real wage is procyclical. d.
all of the above.
49. A result of a model with sticky nominal wages is:
a. involuntary unemployment in the short run. c. money being
countercyclical while in the data money is weakly procyclical.
b. a procyclical real wage as in the data.d. all of the above.
50. A reason that nominal wages might be sticky is:
a. the government sets all wages. c. people having incomplete
information about wages at other jobs.
b. contracts between workers and employers. d. all of the above.
51. The sticky-price model differs from the equilibrium business-cycle
model in assuming that
a. nominal goods prices do not react to market changes quickly. c. real
goods prices do not react to market changes quickly.
b. nominal goods prices react to market changes quickly. d. real goods
prices react to market changes quickly.
52. The sticky-price model differs from the equilibrium business-cycle
model in assuming that
11. a. the typical producer takes as given the price of his or her output. c.
most goods are standardized and easily traded in organized markets.
b. the typical producer actively sets the price of his or her output. d.
most goods are traded in perfectly-competitive markets.
53. The sticky-price model differs from the equilibrium business-cycle
model in assuming that each producer
a. takes into account restaurant costs. c. takes into account menu costs.
b. assumes costs of price changes equal zero. d. assumes restaurant costs
are greater than one.
54. A firm’s nominal marginal cost of production is
a. the ratio of the marginal product of labor to nominal wages. c. nominal
wages minus the marginal product of labor.
b. nominal wages plus the marginal product of labor. d. the ratio of
nominal wages to the marginal product of labor.
55. A firm’s nominal marginal cost of production is
a. the nominal cost of producing an additional unit of the good. c.
equal to the marginal product of labor.
b. the real cost of producing an additional unit of the good. d. the same
thing as a firm’s markup ratio.
56. Under imperfect competiton, each firm
a. has a nominal marginal cost equal to its output price. c. will set its
price below its nominal marginal cost.
b. can set its price above its nominal marginal cost. d. none of the above.
57. If we observe in the market for automobiles that the auto price is above
a firm’s nominal marginal cost, then
a. the firm is not maximizing profits. c. the market has imperfect
competiton.
b. the firm is not accounting for restaurant costs. d. the firm takes as
given its output price.
12. 58. In the short-run in a sticky-price model, an increase in money shifts the
a. supply curve for labor rightward. c. demand curve for labor leftward.
b. supply curve for labor leftward. d. demand curve for labor
rightward.
59. In the short-run in a sticky-price model, a decrease in money shifts the
a. demand curve for labor leftward. c. supply curve for labor rightward.
b. supply curve for labor leftward. d. demand curve for labor
rightward.
60. In the short-run in a sticky-price model, where the product’s price is
fixed by assumption, an increase in demand for a firm’s product will lead to
a. a decrease in production. c. no change in production.
b. an increase in production. d. a decrease in firm profits.
61. Labor hoarding means that
a. workers are motivated to remain out of the labor market during a recession.
c. employers are motivated to retain workers even during a recession.
b. workers are motivated to work additional hours during an expansion. d.
workers are motivated to work fewer hours during an expansion.
62. Labor hoarding may occur because
a. firms face costs in hiring and firing workers. c. firms want to have labor
available for the next economic upturn.
b. workers face costs in the decision to enter the labor force. d. both (a)
and (c).
63. The new Keynesian model may exhibit a multiplier effect, which
implies that
a. the rise in output may be greater than the initial expansion in aggregate
demand. c. the rise in labor supply may be greater than the initial
expansion in aggreagate demand.
13. b. the rise in output will be lower than the initial expansion in aggregate demand.
d. the rise in labor supply will be lower than the initial expansion in
aggreagate demand.
64. In the new Keynesian model, an increase in household consumption
will
a. increase saving. c. increase output by less than the increase in
consumption.
b. increase output by more than the increase in consumption. d. not affect
output.
65. The Federal Funds rate is
a. the 10-year nominal interest rate in the Federal Funds market. c. the
overnight nominal interest rate in the Federal Funds market.
b. the 10-year real interest rate in the Federal Funds market. d. the
overnight nominal interest rate in the Eurodollar market.
66. The Federal Funds rate applies
a. mostly to 30-year home mortgages. c. to the Eurodollar market.
b. mostly to the IMF (International Monetary Fund). d. to the inter-bank
market.
67. A shortcoming of a constant-growth-rate rule for money is that
a. the Fed must have advance knowledge about future quantities of real money
demanded. c. households may not understand how the Fed funds rate affects
them.
b. the Fed must have an accurate measure of currency. d. it does not allow
the nominal interest rate to respond to variations in the real quantity of money
demanded.
SHORT ANSWER
1. What are sticky prices and when might prices be sticky?
14. 2. In a model of price setting what determines firm j’s price?
3. What are the effects of a positive monetary surprise in the short run a
model with sticky prices?
4. What are the long run effects of a monetary surprise in a model with
sticky prices?
5. What are the effects of a monetary surprise in a model with sticky
nominal wages?
6. When would a constant-growth rate rule for money work well, and
when would it be difficult to use?
7. In the Keynesian model with sticky nominal wages, what is the short-
run impact from a monetary expansion?