12/28/24, 8:14 PM Quiz #2 Version A: Attempt review

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Started on Saturday, 28 December 2024, 8:00 PM

Question 1
Correct

Mark 1.00 out of 1.00

Which of the following would shift the FE line to the left?

a. A decrease in the capital stock 

b. A beneficial supply shock

c. An increase in labor supply

d. A decrease in the future marginal productivity of capital

The correct answer is: A decrease in the capital stock

Question 2
Correct

Mark 0.50 out of 0.50

The FE line shows the level of output at which the _____ market is in equilibrium.

a. Labor 

b. Goods

c. Money

d. Asset

The correct answer is: Labor

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Question 3

Correct

Mark 0.50 out of 0.50

Which of the following best explains the concept of the expectations-augmented Phillips Curve?

a. Higher inflation always leads to lower unemployment due to a permanent trade-off.

b. Inflation and unemployment are unrelated when considering adaptive expectations.

c. The trade-off between inflation and unemployment exists only in the short run, as long as inflation expectations are constant. 

d. The Phillips Curve is irrelevant in the presence of supply shocks.

Your answer is correct.

The correct answer is: The trade-off between inflation and unemployment exists only in the short run, as long as inflation expectations are
constant.

Question 4
Correct

Mark 0.50 out of 0.50

The Phillips Curve illustrates the relationship between which two economic variables?

a. Fiscal policy and trade balance

b. Economic growth and interest rates

c. Inflation and unemployment 

d. Money supply and exchange rates

Your answer is correct.

Question 5

Incorrect

Mark 0.00 out of 0.50

A temporary supply shock, such as an increase in oil prices, would

a. shift the IS curve down and to the left and shift the FE line to the left. 

b. shift the IS curve up and to the right, but leave the FE line unchanged.

c. shift the IS curve down and to the left and leave the FE line unchanged.

d. have no effect on the IS curve.

The correct answer is: have no effect on the IS curve.

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Question 6

Correct

Mark 0.50 out of 0.50

When all markets in the economy are simultaneously in equilibrium, we say

a. markets are complete.

b. there is general equilibrium. 

c. here is disequilibrium.

d. markets are perfect.

The correct answer is: there is general equilibrium.

Question 7

Correct

Mark 0.50 out of 0.50

An increase in the money supply would cause the IS curve to

a. remain unchanged. 

b. shift up and to the right only if people face borrowing constraints.

c. shift up and to the right.

d. shift down and to the left.

The correct answer is: remain unchanged.

Question 8
Correct

Mark 0.50 out of 0.50

A temporary decrease in government purchases causes the real interest rate to ________ and output to ________ in the short run, before prices
adjust to restore equilibrium.

a. rise; fall

b. fall; rise

c. fall; fall 

d. rise; rise

The correct answer is: fall; fall

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Question 9

Correct

Mark 0.50 out of 0.50

How does the Phillips Curve change when an economy experiences stagflation?

a. The curve disappears, as inflation and unemployment are no longer measurable.

b. The curve becomes vertical, showing no trade-off between inflation and unemployment.

c. The curve becomes horizontal, suggesting stable inflation regardless of unemployment.

d. The curve shifts outward, indicating higher unemployment and inflation simultaneously. 

Your answer is correct.

The correct answer is: The curve shifts outward, indicating higher unemployment and inflation simultaneously.

Question 10

Correct

Mark 0.50 out of 0.50

A decline in expected future output would cause the IS curve to

a. remain unchanged.

b. shift up and to the right.

c. shift down and to the left. 

d. shift up and to the right only if people face borrowing constraints.

The correct answer is: shift down and to the left.

◄ Note: Monetary Policy

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