a. consistent with the conclusion of Friedman and Phelps, but it is not consistent with the classical idea of monetary neutrality. b. consistent with the classical idea of monetary neutrality, but it is not consistent with the conclusion of Friedman and Phelps. c. consistent with both the conclusion of Friedman and Phelps and the classical idea of monetary neutrality. d. consistent with neither the conclusion of Friedman and Phelps nor the classical idea of monetary neutrality. QUESTION 41 If there is a favorable supply shock, inflation will a. increase and shift the short-run Phillips curve left. b. decrease and shift the short-run Phillips curve right. © c. increase and shift the short-run Phillips curve right. d. decrease and shift the short-run Phillips curve left. QUESTION 42 If there is a favorable supply shock causes, then a. the price level decreases. To counter this a central bank would decrease the money supply. b. the price level increases. To counter this a central bank would increase the money supply. c. the price level decreases. To counter this a central bank would increase the money supply. d. the price level increases. To counter this a central bank would decrease the money supply.

a. consistent with the conclusion of Friedman and Phelps, but it is not consistent with the classical idea of monetary neutrality. b. consistent with the classical idea of monetary neutrality, but it is not consistent with the conclusion of Friedman and Phelps. c. consistent with both the conclusion of Friedman and Phelps and the classical idea of monetary neutrality. d. consistent with neither the conclusion of Friedman and Phelps nor the classical idea of monetary neutrality. QUESTION 41 If there is a favorable supply shock, inflation will a. increase and shift the short-run Phillips curve left. b. decrease and shift the short-run Phillips curve right. © c. increase and shift the short-run Phillips curve right. d. decrease and shift the short-run Phillips curve left. QUESTION 42 If there is a favorable supply shock causes, then a. the price level decreases. To counter this a central bank would decrease the money supply. b. the price level increases. To counter this a central bank would increase the money supply. c. the price level decreases. To counter this a central bank would increase the money supply. d. the price level increases. To counter this a central bank would decrease the money supply.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Analyse the impact of these events on the price level and total output of an economy in the short term. If policymakers were to use monetary policy to actively stabilize the economy, in which direction should they move the money supply and interest rate and show the effects of these policies? Please discuss your answers with appropriate graphs. - (a) The government raises taxes and reduces expenditures to balance its budget. (b) Enterprises in the economy are pessimistic about the economy in the future. - (c) Foreigners increase their taste for domestically produced beef. (d) The money wage rate rises.
QUESTION 1 The major difference between the Keynesian approach and the monetarist approach is that a. there are no differences. b. Keynesian analysis explains an equilibrium condition and monetarism does not. c. monetarism explains an equilibrium condition and Keynesian analysis does not. d. in Keynesian analysis, money affects the economy by first affecting interest rates; monetarist analysis is not limited to working through interest rates. QUESTION 2 When comparing the Keynesian and monetarist approaches, the only substantive difference is that a. Keynesians approach aggregate demand by multiplying the money supply by velocity, while monetarists use the equilibrium conditions of the expenditure schedule. b. Keynesian analysis suggests that money affects consumption first while monetarist analysis suggests that money affects investment spending first. c. the Keynesian equation leads to a prediction of real GDP; the monetarist equation…
1. As a result of an economic policy change, interest rates fall, and consumption and investment rise. This is consistent witha) A monetary expansion.b) A fiscal expansion.c) A fiscal contraction.d) A monetary contraction. 2. Under what conditions might the application of fiscal and monetary policy simply cause a change in the price level, and no change the level of national income.a) The aggregate supply curve is horizontal.b) The aggregate supply curve is vertical.c) The short run aggregate supply curve is flatter than the long run aggregate supply curve.d) The long run aggregate supply curve is flatter than the short run aggregate supply curve. 3. How might government best attempt to address the threat of long-run, structural unemployment, resulting from the globalisation of the economic environment?a) Adopt protectionist measures, such as tariffs.b) Give trade unions a formal role in economic planning.c) Increase subsidies for job retention in manufacturing industry.d) Improve…
Note:- Please give all possible answer for both question options are given below. 8. Using policy to stabilize the economy The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. The current tax system acts as an automatic stabilizer. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. Businesses make investment plans for many months in advance. Which of the following are examples of automatic stabilizers? Check all that apply. Corporate income taxes The discount rate Personal income taxes
Question: In the context of monetary policy and inflation targeting, consider a scenario where a central bank adopts a contractionary monetary policy. Assuming the economy initially operates at the natural rate of unemployment and the Phillips Curve holds in the short run, which of the following outcomes is most likely? A) Short-term increase in both inflation and unemployment. B) Short-term decrease in inflation and an increase in unemployment. C) Long-term stabilization of inflation with no change in unemployment. D) Immediate increase in economic growth and reduction in inflation. Don't use chatgpt please provide valuable answer Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
25. Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade. However, monetary policymakers are slow to recognize that the change is to potential, not current, output and interpret the decrease in output as a recession that leads current to fall below potential output. In this scenario, policymakers believe that building and incorrectly respond by interest rates, sending the economy into a(n) pressures are gap. a. inflationary; raising; inflationary b. inflationary; reducing; inflationary c. inflationary; raising; recessionary d. recessionary; reducing; inflationary e. Not enough information is given.
8. Monetary policy and the Phillips curve The following graph plots the short-run Phillips curve for a hypothetical economy. The given point on the graph indicates the initial rates of unemployment and inflation. Assume that the economy is currently in long-run equilibrium. Suppose the central bank of the hypothetical economy decides to decrease the money supply. On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy. Hint: You may assume that the central bank's move was unanticipated. INFLATION RATE (Percent) 5 2 INFLATION RATE (Percent) 1 0 6 5 0 1 0 3 In the short run, an unexpected decrease in the money supply results in unemployment rate. 0 9 6 12 UNEMPLOYMENT RATE (Percent) 3 SR Phillips Curve On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the decrease in the money supply. O 6 UNEMPLOYMENT RATE (Percent) 9 15 12 18 15 In…
4. Monetary policy and the Phillips curve The following graph shows the current short-run Phillips curve for a hypothetical economy; the point on the graph shows the initial unemployment rate and inflation rate. Assume that the economy is currently in long-run equilibrium. Suppose the central bank of the hypothetical economy decides to decrease the money supply. On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy. Hint: You may assume that the central bank's move was unanticipated. 6 SR Phillips Curve SR Phillips Curve 1 4. 6. 8 10 12 UNEMPLOYMENT RATE (Percent) 4. 2) INFLATION RATE (Percent)
7. Recent monetary policy of the United States Which of the following are factors that contributed to the housing bubble of 2002-2006? Check all that apply. Low inflation A high federal funds rate Abundant and easily available credit from government-sponsored mortgage lenders An economic recession Quantitative easing of 2008 resulted in 7. Recent monetary policy of the United States Which of the following are factors that contributed to the housing bubble of 2002-2006? Check all that apply. Low inflation A high federal funds rate Abundant and easily available An economic recession Quantitative easing of 2008 resulted in Low inflation a slow growth and high inflation 7. Recent monetary policy of the United States a high growth and low inflation a high growth and low unemployment ssion a slow growth and high unemployment resulted in which can be explained by gage lenders Which of the following are factors that contributed to the housing bubble of 2002-2006? Check all that apply. F which…
4. Monetary policy and the Phillips curve The following graph shows the current short-run Phillips curve for a hypothetical economy; the point on the graph shows the initial unemployment rate and inflation rate. Assume that the economy is currently in long-run equilibrium. Suppose the central bank of the hypothetical economy decides to increase the money supply. On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy. Hint: You may assume that the central bank's move was unanticipated. INFLATION RATE (Percent) 6 5 N 1 0 0 SR Phillips Curve + 4 2 3 UNEMPLOYMENT RATE (Percent) 1 5 SR Phillips Curve In the short run, an unexpected increase in the money supply results in the unemployment rate. (?) in the inflation rate and in
35)Why is the 1982 recession called a textbook recession? Select one: a. The textbooks say inflation was not a problem in 1982 and Paul Volcker made a mistake by causing a recession b. The textbooks say that if inflation is too high then the Fed has to raise the interest rate to curb spending c. The textbooks say that if inflation is too high then the Fed must lower the interest rate to curb (decrease) spending d. The textbooks say that if inflation is too high then the Fed must do nothing
1) Suppose that inflation is currently 7% and inflationary expectations are also 7%. Assume that intermediate goods prices are not contributing to increased costs. If the Fed wishes to reduce inflation, it must set interest rates to A. raise investment B. create an expansionary output gap C. make actual output equal to potential output D. create a recessionary output gap E. raise consumption