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# Macroeconomics Essay

964 words - 4 pages

Question 1
1.
In the dynamic model, the demand for goods and services will ______ as the natural level of output increases and ______ as the real interest rate increases.
| A. | increase; increase |
| B. | decrease; decrease |
| C. | decrease; increase |
| D. | increase; decrease |
1 points
Question 2
1.
In the dynamic model, changes in fiscal policy are captured in changes in the:
| A. | natural rate of interest. |
| B. | random demand shock. |
| C. | natural level of output. |
| D. | expected rate of inflation. |
1 points
Question 3
1.
A higher real interest rate (r↑) reduces the demand for goods and services by:
...view middle of the document...

|
| C. | at which the natural rate of unemployment equals the natural rate of output. |
| D. | that most people anticipate based on their expectations of inflation. |
1 points
Question 7
1.
According to the Fisher equation the real interest, rt, equals the nominal interest rate, it, minus the expected inflation rate, which is written as:
| A. | Etπt + 1 |
| B. | Et + 1πt + 1 |
| C. | Etπt |
| D. | Et + 1πt |
1 points
Question 8
1.
According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:
| A. | ex ante rate of interest. |
| B. | expected rate of inflation. |
| C. | natural rate of interest. |
| D. | ex post rate of inflation. |
1 points
Question 9
1.
The ex post real interest rate that prevails at time t equals:
| A. | it - Etπt + 1 |
| B. | it - πt + 1 |
| C. | it - πt |
| D. | it - Etπt |
1 points
Question 10
1.
The current inflation rate, πt, represents the change in the price level between periods:
| A. | t and t + 1. |
| B. | t and t + 2. |
| C. | t − 1 and t |
| D. | t − 1 and t + 1. |
1 points
Question 11
1.
The nominal interest rate, it, is the rate of return between periods:
| A. | t – 1 and t + 1. |
| B. | t and t + 1. |
| C. | t and t + 2. |
| D. | t – 1 and t. |
1 points
Question 12
1.
According to the Phillips curve, firms ______ prices when output is below the natural level of output, or equivalently, when the unemployment rate is ______ the natural rate of unemployment.
| A. | raise; above |
| B. | lower; below |
| C. | lower; above |
| D. | raise; below |
1 points
Question 13
1.
According to the Phillips curve, firms raise prices when output is ______ the natural level of output, or equivalently, when the unemployment rate is ______ the natural rate of unemployment.
| A. | below; above |
| B. | below; below |
| C. | above; above |
| D. | above; below |
1 points
Question 14
1.
According to the Phillips curve, inflation depends on expected inflation because:
| A. | the natural level of output depends on the...

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