Roots Of Modern Macroeconomics MCQs

Option A: that monetary policy affects aggregates demand

Option B: that markets do not clear quickly

Option C: that fiscal policy affects aggregate demand

Option D: of rational expectations.

Correct Answer: of rational expectations. ✔

Option A: it is difficult to measure the value of nominal GDP over time

Option B: there has been very little fluctuation in the money supply over time.

Option C: it is difficult to measure the demand for money over time

Option D: whether velocity is constant or not may depend on how the money supply is measure.

Correct Answer: whether velocity is constant or not may depend on how the money supply is measure. ✔

Option A: an equal percentage change in nominal DGP.

Option B: an equal percentage change in real GDP

Option C: a larger percentage change in nominal GDP

Option D: a smaller percentage change in nominal

Correct Answer: an equal percentage change in nominal DGP. ✔

Option A: assume that this year’s inflation rate will be the same as last year’s inflation rate

Option B: merely guess at the inflation rate.

Option C: assume that this year’s inflation rate will be equal to the average inflation rate over the past 10 years

Option D: Use all available information in forming their expectations.

Correct Answer: Use all available information in forming their expectations. ✔

Option A: Rational-expectations hypothesis

Option B: Passive-expectations hypothesis

Option C: adaptive expectations hypothesis

Option D: lagged-expectations hypothesis.

Correct Answer: Rational-expectations hypothesis ✔

Option A: fine tuning

Option B: monestarism

Option C: microeconomics foundations of macroeconomics

Option D: the classical model

Correct Answer: fine tuning ✔

Option A: the behaviour of trade unions.

Option B: the quantity of money

Option C: price and wages

Option D: the level of aggregate demand for goods and services

Correct Answer: the level of aggregate demand for goods and services ✔

Option A: the level of aggregate demand for goods and services.

Option B: prices and wages

Option C: interest rates

Option D: the quantity of money

Correct Answer: prices and wages ✔

Option A: new-Keynesian.

Option B: post-Keynesian.

Option C: classical economists.

Option D: Keynesian.

Correct Answer: classical economists. ✔

Option A: monetarists.

Option B: keynesians

Option C: post-keynesians

Option D: new classical school

Correct Answer: keynesians ✔

Option A: Keynesians

Option B: post-keynesians

Option C: monetarists

Option D: new classical school

Correct Answer: new classical school ✔

Option A: how unemployment could have persisted for so long during the Great Depression

Option B: The increase in the growth rate of real output in the 1950s

Option C: the stagflation of the 1970s

Option D: Why policy changes that are perceived as permanent have more of an impact on a person’s behaviour than policy changes that are viewed as temporary.

Correct Answer: the stagflation of the 1970s ✔

Option A: not constant and the quantity theory of money does hold.

Option B: constant and the quantity theory of money does hold.

Option C: not constant and the quantity theory of money does not hold.

Option D: constant and the quantity theory of money does not hold.

Correct Answer: not constant and the quantity theory of money does not hold. ✔

Option A: the fallacy of composition

Option B: negative entropy.

Option C: hysteresis.

Option D: ceteris paribus

Correct Answer: hysteresis. ✔

Option A: consistently overestimate the actual rate of inflation in the future.

Option B: are always correct

Option C: consistently underestimate the actual rate of inflation in the future

Option D: are correct on average, but are subject to errors that are distributed randomly

Correct Answer: are correct on average, but are subject to errors that are distributed randomly ✔

Option A: slump

Option B: inflation

Option C: stagflation

Option D: stagnation

Correct Answer: stagflation ✔

Option A: laissez-faire.

Option B: monetary policy

Option C: fine tuning

Option D: automatic stablisers

Correct Answer: fine tuning ✔

Option A: stagflation in the late 1970s

Option B: demand-pull inflation in the 1960s

Option C: low growth rates in the 1950s

Option D: The prolonged existence of high unemployment during the Great depression

Correct Answer: The prolonged existence of high unemployment during the Great depression ✔

Option A: requires fine tuning to reach full employment

Option B: can never deviate from full employment

Option C: will never be at full employment

Option D: is self-correcting.

Correct Answer: is self-correcting. ✔

Option A: market prices

Option B: sticky prices

Option C: fixed prices

Option D: regulatory prices

Correct Answer: sticky prices ✔