Question • Question 1 2 out of 2 points In 2008 the U.S. budget deficit increased. Accor

03 Jun Question • Question 1 2 out of 2 points In 2008 the U.S. budget deficit increased. Accor

Question
• Question 1

2 out of 2 points

In 2008 the U.S. budget deficit increased. According to the open-economy macroeconomic model

the interest rate and the real exchange rate should have risen.

the interest rate and the real exchange rate should have fallen.

the interest rate should have fallen and the real exchange rate should have risen.

the interest rate should have risen and the real exchange rate should have fallen.

• Question 2

2 out of 2 points

An increase in the interest rate increases the opportunity cost of holding money, so the quantity of money demanded falls.

True

False

• Question 3

2 out of 2 points

Under the assumptions of quantity theory, if the money supply increases by 3 percentage points which of the following increases by 3 percentage points?

the price level but not real GDP

neither real GDP nor the price level

real GDP but not the price level

real GDP and the price level

• Question 4

2 out of 2 points

During the financial crisis and recession of 2008-2009

unemployment and inflation were low

unemployment and inflation were high

unemployment was low and inflation was high

unemployment was high and inflation was low

• Question 5

2 out of 2 points

If the short-run aggregate supply curve were to shift left, prices and output would fall.

True

False

• Question 6

2 out of 2 points

If consumers and businesses became more pessimistic about the future of the economy, the government could try to stabilize output by

decreasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.

decreasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.

increasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.

increasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.

• Question 7

2 out of 2 points

The long-run Phillips curve implies that monetary policy influences nominal but not real variables.

True

False

• Question 8

2 out of 2 points

When the Fed announces a target for the federal funds rate it essentially accommodates the day-to-day shifts in money demand by adjusting the money supply accordingly.

True

False

• Question 9

2 out of 2 points

According to rational expectations if the government made a credible commitment to a policy of low inflation, people would be rational enough to lower their expectations of inflation immediately. The short run Phillips curve would shift downward and the economy would reach low inflation quickly.

True

False