宏观经济学（英文版） chapter 12.docx

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1、Macroeconomics (Hubbard et al.)Chapter 12 Aggregate Demand, Aggregate Supply, and Monetary Policy12.1Monetary Policy Rules and Aggregate Demand1) In general, a formula that a central bank uses to set interest rates in response to changing economic conditions is called aA) rate-of-return equation.B)

2、Taylor rule.C) monetary policy rule.D) market adaptation identity.Answer: CDiff: 1 Page Ref: 450Topic: Monetary Policy RulesObjective: LOI: Describe monetary policy rules and how they affect aggregate demand.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring2) The steeper the monetar

3、y policy rule, the the central bank increases the interest rate inresponse to the current inflation rate being above the target inflation rate and the the centralbank decreases the interest rate in response to the actual inflation rate being below the target inflation rate.A) more; moreB) more; less

4、C) less; moreD) less, lessAnswer: ADiff: 2 Page Ref: 450Topic: Monetary Policy RulesObjective: LOI: Describe monetary policy rules and how they affect aggregate demand.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring3) The slope of the aggregate demand curve indicates that in the i

5、nflation rate leads toof real GDP demanded by households and firms.A) an increase; a higher levelB) a decrease; a lower levelC) a decrease; a higher levelD) an increase; no change in the levelAnswer: CDiff: 2 Page Ref: 451Topic: The Aggregate Demand CurveObjective: LOI: Describe monetary policy rule

6、s and how they affect aggregate demand.Special Feature: noneDiff: 1 Page Ref: 456Topic: Aggregate Supply and the Phillips CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring(percent deviation

7、 from potential GDP)3) Refer to Figure 12.3. Other things equal, a movement from point C to point B would be caused by an increase in the price level.a decrease in the price level.a positive supply shock.a negative supply shock.Answer: ADiff: 2 Page Ref: 457-458Topic: Shifts in the Aggregate Supply

8、CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Analytic Skills*: Recurring4) Refer to Figure 12.3. Other things equal, a decrease in inflationary expectations would best be represented by a movement fromA) point A to point B.

9、B) point B to point A.C) point C to point B.D) point C to point B.Answer: ADiff: 2 Page Ref: 457-458Topic: Shifts in the Aggregate Supply CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Analytic Skills*: Recurring5) Refer to F

10、igure 12.3. Other things equal, technological innovation would best be represented by a movement fromA) point A to point B.B) point B to point A.C) point C to point B.D) point C to point B.Answer: ADiff: 2 Page Ref: 457-458Topic: Shifts in the Aggregate Supply CurveObjective: LO2: Explain the relati

11、onship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Analytic Skills*: Recurring6) Refer to Figure 12.3. Hurricane Katrina was responsible for destroying a large portion of oil and natural gas refining capacity on the Gulf coast in 2005. Other things equal, this would b

12、est be represented by a movement fromA) point A to point B.B) point B to point A.C) point B to point C.D) point A to point C.Answer: BDiff: 2 Page Ref: 457-458Topic: Shifts in the Aggregate Supply CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special F

13、eature: noneAACSB: Analytic Skills*: Recurring7) Refer to Figure 12.3. Suppose workers expect inflation to rise from 1% to 3% next year. Other things equal, this would best be represented by a movement fromA) point A to point B.B) point B to point A.C) point B to point C.D) point A to point C.Answer

14、: BDiff: 2 Page Ref: 457-458Topic: Shifts in the Aggregate Supply CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Analytic Skills*: Recurring8) Refer to Figure 12.3. Suppose that, due to a recession, foreign workers begin to l

15、eave the United States to search for work in their home countries. Other things equal, this would best be represented in the United States by a movement fromA) point A to point B.B) point B to point A.C) point B to point C.D) point A to point C.Answer: BDiff: 2 Page Ref: 457-458Topic: Shifts in the

16、Aggregate Supply CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Analytic Skills*: Recurring9) Refer to Figure 12.3. Other things equal, an increase in worker productivity would best be represented by a movement fromA) point A

17、 to point B.B) point B to point A.C) point C to point A.D) point C to point B.Answer: ADiff: 2 Page Ref: 457-458Topic: Shifts in the Aggregate Supply CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Analytic Skills*: Recurring1

18、0) Refer to Figure 12.3. Other things equal, an increase in the expected price of an important natural resource would best be represented by a movement fromA) point A to point B.B) point B to point A.C) point B to point C.D) point A to point C.Answer: BDiff: 2 Page Ref: 457-458Topic: Shifts in the A

19、ggregate Supply CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Analytic Skills*: RecurringArticle SummaryIn a May 2011 speech, Charlie Been, deputy governor of the Bank of England, announced the BOE has chosen to accept a tem

20、porary period of above-target inflation, rather than seeking to hold inflation as close to the 2% target as possible at all times.” Inflation in the UK has been above the target rate for 5 years, and current projections show it remaining above the target for another two years. A majority of the memb

21、ers of the BOEs Monetary Policy Committee (MPC) believe that recent inflation has been pushed up because of an increase in the VAT and the recent surge in commodity prices, and are convinced that it will decline significantly in 2012. Household consumption and business investment in the UK have rema

22、ined stagnant, so the MPC has been reluctant to raise interest rates, fearing an erosion of consumer confidence. Bank governor Mervyn King has stated that the MPC is basing its policy decisions on maintaining interest rates that are tolerable for the heavily-indebted household sector. Some fear, how

23、ever, that the Banks abandoning of its inflation target could reduce investor confidence, and a loss in confidence in the Banks willingness to control inflation will increase economic volatility. Recently, the inflation rate for both goods and services in the U.K. has exceeded 4%, reaching 4.5% in A

24、pril 2011.Source: Alen Mattich, uOff-Target BOE is Taking Risks by Ignoring Inflation J Wall Street Journal, May 27, 2011.11) Refer to the Article Summary. The BOE announced that it has chosen to “accept a temporary period of above-target inflation”. Assuming that the announcement is seen as credibl

25、e, this will tend to increase inflationary expectations, which will result in A) the AD curve shifting to the right.B) the AD curve shifting to the right.C) the AS curve shifting to the left. D) the AS curve shifting to the left. Answer: DDiff: 2 Page Ref: 458Topic: Shifts in the Aggregate Supply Cu

26、rveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve. Special Feature: Making the Connection: Off-Target BOE is Taking Risks by Ignoring Inflationn AACSB: Reflective Thinking Skills12) Explain the relationship between the aggregate supply curve and the Phillips

27、 curve.Answer: The aggregate supply curve shows the total quantity of output, or real GDP, that firms are willing and able to supply at a given inflation rate. This is the same as the definition for the Phillips curve. Therefore, the two curves are the same.Diff: 2 Page Ref: 456Topic: Aggregate Supp

28、ly and the Phillips CurveObjective: LO2: Explain the relationship between aggregate supply and the Phillips curve. Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring13) For each of the following scenarios, state the short-run effect on the AS curve.a. The price level decreases.b. Low

29、er inflation is expected in the future.c. Worker productivity declines.d. Oil prices increase.e. The size of the labor force decreases.Answer:a. A price level decrease will cause a movement down the AS curve.b. Lower expected inflation will shift the AS curve to the right.c. A decline in worker prod

30、uctivity will shift the AS curve to the left.d. An increase in the price of oil will shift the AS curve to the left.e. A decrease in the size of the labor force will shift the AS curve to the left.Diff: 2 Page Ref: 457-458Topic: Shifts in the Aggregate Supply CurveObjective: LO2: Explain the relatio

31、nship between aggregate supply and the Phillips curve.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring12.3 The Aggregate Demand and Aggregate Supply Model1) The economy is in long-run equilibrium when and.A) real GDP equals potential GDP; the unemployment rate equals zeroB) the out

32、put gap equals zero; the inflation rate equals the target inflation rate and the expected inflation rateC) the output gap is at its maximum; the inflation rate equals the target inflation rate and the expected inflation rateD) the unemployment rate equals the natural rate of unemployment; the inflat

33、ion rate equals zero Answer: BDiff: 1 Page Ref: 459Topic: Equilibrium in the AD-AS ModelObjective: LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring2) A combination of high inflation and rec

34、ession, usually resulting from a supply shock, is known as A) hyperinflation.B) disinflation.C) stagflation.D) depression.Answer: CDiff: 1 Page Ref: 459Topic: The Effects of a Supply ShockObjective: LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special

35、Feature: noneAACSB: Reflective Thinking Skills*: Recurring3) The short-run effect of a negative supply shock isA) lower inflation and a declining output gap.B) lower inflation and an increasing output gap.C) higher inflation and a declining output gap.D) higher inflation and an increasing output gap

36、.Answer: CDiff: 2 Page Ref: 460Topic: The Effects of a Supply ShockObjective: LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring4) When the economy responds to a supply shock, there is in the

37、 short run and inthe long run between inflation and unemploymentA) an inverse relationship; no trade-offB) no trade-off; an inverse relationshipC) an inverse relationship; an inverse relationshipD) no trade-off; no trade-offAnswer: DDiff: 2 Page Ref: 461Topic: The Effects of a Supply ShockObjective:

38、 LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special Feature: noneAACSB: Reflective Thinking SkillsE) Recurring5) If the central bank is facing the zero bound constraint and announces a higher inflation target, A) the real interest rate will increase,

39、 which will decrease aggregate expenditure.B) the real interest rate will decrease, which will increase aggregate expenditure.C) the nominal interest rate will increase, which will decrease aggregate expenditure.D) the nominal interest rate will decrease, which will increase aggregate expenditure.An

40、swer: BDiff: 2 Page Ref: 462Topic: The Effect of a Change in the Monetary Policy RuleObjective: LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special Feature: noneAACSB: Reflective Thinking Skills*: Recurring6) When he was chairman of the Fed, Paul Volc

41、ker faced an economy with significant stagflation which was a result of oil shocks. Volcker was determined to bring the inflation rate down, which essentially acted like a decrease in the inflation target. In this sense, Volckers action caused and causedinflation to decrease and.A) the AD curve to s

42、hift to the left; real GDP to increase.B) the AD curve to shift to the left; real GDP to decrease.C) the AS curve to shift to the right; real GDP to increase.D) the AS curve to shift to the right; real GDP to decrease.Answer: BDiff: 2 Page Ref: 464-465Topic: The Effect of a Change in the Monetary Po

43、licy RuleObjective: LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special Feature: Making the Connection: The End of Stagflation and the Volcker RecessionAACSB: Reflective Thinking SkillsFigure 12.47) Refer to Figure 12.4. Suppose the economy is initial

44、ly at long-run equilibrium and the Fed increases the target inflation rate, and to hit this rate, it must reduce the real interest rate. This is best represented by an initial movement fromA) point A to point B.B) point A to point D.C) point A to point C.D) point B to point C.Answer: ADiff: 2 Page R

45、ef: 462Topic: The Effect of a Change in the Monetary Policy RuleObjective: LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special Feature: noneAACSB: Analytic SkillsE) Recurring8) Refer to Figure 12.4. Suppose the economy is initially at long-run equilib

46、rium and the Fed increases the target inflation rate, and to hit this rate, it must reduce the real interest rate. The economy then reaches a new, short-run equilibrium point. Assuming expectations are adaptive, the next movement is best represented as a movement fromA) point C to point B.B) point C

47、 to point A.C) point D to point C.D) point B to point C.Answer: DDiff: 2 Page Ref: 462Topic: The Effect of a Change in the Monetary Policy RuleObjective: LO3: Use the aggregate demand and aggregate supply model to analyze macroeconomic conditions.Special Feature: noneAACSB: Analytic Skills*: Recurri

48、ngAACSB: Reflective Thinking Skills*: Recurring4) An increase in the inflation rate results in in the quantity of real GDP demanded because ahigher price level.A) an increase; increases consumption and investment.B) a decrease; increases consumption and investment.C) a decrease; reduces consumption and investment.D) an increa