Advmacro hw (8)

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University of Texas *

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320

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Economics

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Jan 9, 2024

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Uploaded by MagistrateFlowerArmadillo11

Advanced Macroeconomic Theory Homework - Set 10 Instructions: Please choose the correct option (A, B, C, or D) for each question. According to the "Lucas Critique," why is it important to consider the expectations of economic agents when evaluating the impact of policy changes? A. Expectations can change in response to policy changes. B. Expectations have no impact on economic outcomes. C. Policy changes always lead to predictable outcomes. D. Policymakers can accurately forecast the reactions of economic agents. The "Real Business Cycle" theory attributes economic fluctuations primarily to: A. Changes in monetary policy. B. Technological shocks and changes in productivity. C. Shocks to aggregate demand. D. Wage and price rigidities. According to the "efficient market hypothesis," what happens when new information becomes available in financial markets? A. Markets overreact to new information. B. Prices adjust slowly to new information. C. Prices instantly and fully reflect all available information. D. Investors ignore new information. The "Gini coefficient" is a measure of:

A. Economic growth rates. B. Income inequality. C. Unemployment rates. D. Fiscal policy effectiveness. In the context of the "Permanent Income Hypothesis," what is the main factor influencing consumer spending decisions? A. Current income. B. Past income. C. Expected future income. D. Changes in interest rates. The concept of "heterodox economics" refers to: A. Mainstream economic theories taught in universities. B. Unconventional or non-mainstream economic theories. C. The study of economic history. D. Economic policies that are not evidence-based. According to the "expectations-augmented Phillips Curve," what is the long-run impact of expansionary monetary policy on inflation and unemployment? A. Inflation decreases, and unemployment increases. B. Inflation increases, and unemployment decreases. C. Inflation and unemployment remain unchanged. D. Inflation and unemployment both decrease. The "Mundell-Fleming model" is often used to analyze the:

A. Long-term growth prospects of an economy. B. Impact of fiscal policy on inflation. C. Interaction between exchange rates, interest rates, and monetary policy. D. Effects of changes in technology on productivity. The "Fisher Effect" in macroeconomics describes the relationship between: A. Inflation and nominal interest rates. B. Government spending and economic growth. C. Exchange rates and trade balances. D. Fiscal policy and unemployment. The concept of "creative destruction" is associated with the economist: A. Joseph Schumpeter. B. John Maynard Keynes. C. Friedrich Hayek. D. Milton Friedman.

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