Review_Final_Int-Macro (3)

Review_Final_Int-Macro (3) - Review_Final 1. In the short...

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Review_Final 1. In the short run, if the price level is greater than the expected price level, then in the long run, the aggregate: a. Demand curve will shift leftward b. Demand curve will shift rightward] c. Supply curve will shift upward d. Supply curve will shift downward Ans: C 2. The Phillips curve depends on all of the following except: a. The current exchange rate b. Expected inflation c. The deviation of unemployment from its natural rate d. Supply shocks Ans: A 3. In case of demand pull inflation, other things being equal: a. Both the inflation rate and unemployment rate rise in the same time b. The unemployment rate rises but the inflation rate falls c. The inflation rate rises but the unemployment rate falls d. Both the inflation rate and unemployment rate fall Ans: C 4. The percentage of a year’s real GDP that must be foregone to reduce inflation by 1% point is called a. NAIRU b. Short run Phillips curve c. Sacrifice ratio d. Okun’s law
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Ans: C 5. Assume that an economy has the Phillips curve π = π -1 - 0.5(u – 0.06), Then the natural rate of unemployment is a. 0.5 b. 0.12 c. 0.06 d. 0.03 Ans: C 6. Assume that an economy has the Phillips curve π = π -1 - 0.5(u – 0.06). How many percentage point-years of cyclical unemployment are needed to reduce inflation by 5% points? a. 20 b. 10 c. 5 d. 2,5 Ans: B 7. Short-run Phillips curve a. Shifts upward if expected inflation increases b. Shifts upward if expected inflation decreases c. Shifts downward if expected inflation increases d. Is vertical Ans: A 8. In the Mundell-Fleming model:
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This document was uploaded on 10/28/2011 for the course 220 321 at Rutgers.

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Review_Final_Int-Macro (3) - Review_Final 1. In the short...

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