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ECO 4223 Exam 2 Questions And 100% Correct Answers
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ECO 4223 Exam 2 Questions And 100% Correct AnswersIn the model of fiat money developed in Lecture 7, the demand for money is the demand
to hold ________.
- Answer Irredeemable Paper Bank Notes.
In the model of fiat money developed in Lecture 7, the supply of money is just the total
stock issued by the central bank because fiat monies _______.
- Answer have no non-monetary uses.
Unlike the gold standard, there is _______ mechanism to govern the supply of money in a
fiat money regime. - Answer no automatic
How a central bank conducts monetary policy will depend _____. - Answer on both the
information available to policymakers and the incentives policymakers face.
In the 1960s and early 1970s, most economists believed there was a stable, exploitable
tradeoff between _____ and ______. - Answer inflation, unemployment
In the 1970s, the United States experienced ________. - Answer stagflation
The (naiive) Phillips Curve was thought to represent a menu of policy options, whereby
policy makers could achieve a lower unemployment rate so long as they were willing to
put up with _______, and vice versa. - Answer higher inflation
Notable absent from the (naiive) Phillips Curve was a reasonable assumption about
_______. - Answer Inflation Expectations
When inflation expectations fall the expectations augmented Phillips Curve shifts
, ________. - Answer down
The long run Phillips Curve is conventionally drawn as a ______ line that intersects the
axis at __________. - Answer horizontal; the natural rate of unemployment, U".
According to Abrams (2006) political monetary (or business) cycle political monetary
cycle exists in the United States, but only when the President and the _________ share
party allegiance. - Answer Federal Reserve Chair
A country experiences hyperinflation when the price level grows more than __________. -
Answer 50 percent per month
Use the rule of 70 to calculate about how many years it will take prices to double in a
country with an inflation rate of 3 percent per month. - Answer 23.3 months
(70/3) months
Use the rule of 70 to calculate the approximate inflation rate in a country that has seen
its price level double in 12.1 years. - Answer 5.8 percent per year
(70/12/1) per year
Use the rule of 70 to approximate the inflation rate in a country that has experienced a
quadrupling of its price level in 15.9 years. -Answer 8.8 percent per year.
15.9/2=7.95
70/7/95=8.8
When inflation is higher than expected, borrowers and employers tend to ____. -Answer
gain at the expense of lenders and employees
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