Question 1

Suppose the central bank increases the money supply in an economy unexpectedly during a year. If the current inflation rate in this country is 3.4 percent, then according to new classical economists the expected inflation rate for the following year would be:

Accepted Answer

A)   3.4 percent.
B)   less than 3.4 percent.
C)   2.4 percent, because people form their expectations adaptively.
D)   around 6.8 percent.
E)   greater than 3.4 percent.F) A) and B)
G) A) and D)

Question 2

Which of the following economic theories favors an active role for government in promoting low inflation and economic growth?

Accepted Answer

A)   New Keynesian
B)   Monetarists
C)   New classical economists
D)   Classical economists
E)   MarxistsF) A) and E)
G) B) and E)

Question 3

The figure given below represents the new classical long run and short run Phillips curve measuring inflation rate on vertical axis and unemployment rate on horizontal axis.
Figure 15.2
 
-Refer to Figure 15.2. Assume that the government adopted an unexpected expansionary monetary policy that has the economy currently at point D. If people expect that this inflation rate will persist next year, the economy will now:

Accepted Answer

A)   move to point A.
B)   move to point B.
C)   move to point C.
D)   move to point E.
E)   remain at point D.F) A) and B)
G) D) and E)

Exam 15: Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Suppose the central bank increases the money supply in an economy unexpectedly during a year. If the current inflation rate in this country is 3.4 percent, then according to new classical economists the expected inflation rate for the following year would be:

Correct Answer
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Which of the following economic theories favors an active role for government in promoting low inflation and economic growth?

Correct Answer
verified

Correct Answer
verified

Exam 15: Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Suppose the central bank increases the money supply in an economy unexpectedly during a year. If the current inflation rate in this country is 3.4 percent, then according to new classical economists the expected inflation rate for the following year would be:

Correct AnswerverifiedShow Answer

Which of the following economic theories favors an active role for government in promoting low inflation and economic growth?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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