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15. If the Bank of Canada announced a policy to reduce inflation and people found it...
21. Which of the following is one reason for the existence of policy lags? a. Government experts...
21. Which of the following is one reason for the existence of policy lags? a. Government experts are slow in figuring out what is going on. b. Households and firms plan their spending in advance and therefore are slow in responding to changes in interest rates. c. It is impossible to build an accurate model of the economy. d. It is difficult for the Bank of Canada to change the bank rate. 22. What does the time inconsistency of policy imply? a....
A country is likely to have a higher sacrifice ratio if A. contracts are longer, and...
A country is likely to have a higher sacrifice ratio if A. contracts are longer, and people believe the central bank will not reduce inflation B. contracts are longer, and people believe the central bank will reduce inflation. C. contracts are shorter, and people believe the central bank will reduce inflation. D. contracts are shorter, and people believe the central bank will not reduce inflation. Monetary Policy in Mokania Mokania has had inflation of 15% for many years. Mokania establishes...
3. Aggregate Supply Shocks Suppose that a small economy that depends mostly on agriculture experiences a...
3. Aggregate Supply Shocks Suppose that a small economy that depends mostly on agriculture experiences a year with exceptionally good conditions for growing crops. What would the good weather do to the Short-run Aaggregate Supply curve and the Short-run Phillips Curve? a. It would shift both the Short-run Aggregate Supply Curve and the Short-run Phillips Curve b. It would shift both the Short-run Aggregate Supply curve and the Short-run Phillips Curve c. It would shift the Short-run Aggregate Supply Curve...
10. In the 1970s "Great Inflation", inflation was increased because Policy makers thought potential output was...
10. In the 1970s "Great Inflation", inflation was increased because Policy makers thought potential output was higher than it actually turned out to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out a. b. to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out to be and policy shifted the AD curve to the...
For a given level of inflation expectations, if the central bank increases the money supply growth...
For a given level of inflation expectations, if the central bank increases the money supply growth rate, then in the short run a. the Phillips curve shifts left b. the economy moves down along the short-run Phillips curve C. the economy moves up along the short-run Phillips curve. d. the Phillips curve shifts right.
When the Fed changes monetary policy to reduce the rate of inflation, which of the following...
When the Fed changes monetary policy to reduce the rate of inflation, which of the following should occur in the medium run? (A) The AD curve should shift to the right. (B) The IA line should shift down. (C) The AD curve should shift to the left. (D) The IA line should shift up.
Consider the following statements a. A fall in expected inflation will shift the long-run Phillips curves...
Consider the following statements a. A fall in expected inflation will shift the long-run Phillips curves to the left. b. A fall in expected inflation will shift the short-run Phillips curve to the left. c. An increase in expected inflation will leave the long-run Phillips curve unaffected. d. An increase in unanticipated inflation will change the distribution of income in the economy 1 Only (a) is correct 2 Both (c) and (d) are correct 3 (b) (c) and (d) are...
Suppose that the Bank of Canada wishes to reduce the rate of inflation from its current...
Suppose that the Bank of Canada wishes to reduce the rate of inflation from its current 8% to 4% and the bank is prepared to accept a sacrifice ratio of 2. If the potential GDP is $800 billion, then this would imply that the bank is prepared to accept a decline of annual real GDP of O A. $67.2 billion. OB. $70.0 billion. OC. $57.6 billion. OD. $64.0 billion. O E. $60.8 billion
11. How does a decrease in the expected rate of inflation shift the Phillips curves? a....
11. How does a decrease in the expected rate of inflation shift the Phillips curves? a. It shifts both the short-run and long-run Phillips curves to the right. b. It shifts both the short-run and long-run Phillips curves to the left. It shifts only the short-run Phillips curve to the right. d. It shifts only the short-run Phillips curve to the left. in hou do the short-run Phillips curve and unemplo C.
Suppose the short run Phillips Curve is given by: Inflation = Expected Inflation + 0.2 -...
Suppose the short run Phillips Curve is given by: Inflation = Expected Inflation + 0.2 - 4*Unemployment Rate Assume that initially, people expect zero inflation. a)Draw the short run Phillips Curve and the long run Phillips Curve on a graph b)On the graph, represent what would happen in the short run if the government decided to run 4% inflation (setting inflation =0.04). c)On the graph, represent what would happen in the long run if the government decided to run 4%...
3. Aggregate Supply Shocks Suppose that a small economy that depends mostly on agriculture experiences a year with exceptionally good conditions for growing crops. What would the good weather do to the Short-run Aaggregate Supply curve and the Short-run Phillips Curve? a. It would shift both the Short-run Aggregate Supply Curve and the Short-run Phillips Curve b. It would shift both the Short-run Aggregate Supply curve and the Short-run Phillips Curve c. It would shift the Short-run Aggregate Supply Curve...
10. In the 1970s "Great Inflation", inflation was increased because Policy makers thought potential output was higher than it actually turned out to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out a. b. to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out to be and policy shifted the AD curve to the...
For a given level of inflation expectations, if the central bank increases the money supply growth rate, then in the short run a. the Phillips curve shifts left b. the economy moves down along the short-run Phillips curve C. the economy moves up along the short-run Phillips curve. d. the Phillips curve shifts right.
Suppose that the Bank of Canada wishes to reduce the rate of inflation from its current 8% to 4% and the bank is prepared to accept a sacrifice ratio of 2. If the potential GDP is $800 billion, then this would imply that the bank is prepared to accept a decline of annual real GDP of O A. $67.2 billion. OB. $70.0 billion. OC. $57.6 billion. OD. $64.0 billion. O E. $60.8 billion
11. How does a decrease in the expected rate of inflation shift the Phillips curves? a. It shifts both the short-run and long-run Phillips curves to the right. b. It shifts both the short-run and long-run Phillips curves to the left. It shifts only the short-run Phillips curve to the right. d. It shifts only the short-run Phillips curve to the left. in hou do the short-run Phillips curve and unemplo C.
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