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Chapter 10 Quiz Intermediate Macro

Terms in this set (20)

Classical economists believe that
money is neutral
The distinction between real and nominal shocks is that
real shocks directly affect only the IS curve or the FE line, but not the LM curve
According to the misperceptions theory, an unanticipated decrease in the money supply shifts the AD curve ________, causing output to ________ in the short run
down and to the left; fall
Models that are similar to RBC models but allow for shocks other than productivity shocks are known as
DSGE models
According to the misperceptions theory, if the Fed wanted to use monetary policy to influence the real economy it would have to
surprise the public with unexpected changes in monetary policy
In recessions, workers will find that their skills do not match the requirements of industries with growing labor demand; these workers may become chronically unemployed, which represents a rise in _______ unemployment
structural
The idea that expected future increases in output cause increases in the current money supply and that expected future decreases in output cause decreases in the current money supply, rather than the other way around, is known as
reverse causation
If you expect a general price increase of 5% this year and the price of the hamburgers you sell increases by 10%, you would conclude that the relative price of your good has
increased, and you would increase your output
According to classical economists, in recessions, the government should
eliminate barriers to labor market adjustment, such as burdensome regulations on businesses
Which of the following equations is most likely to represent short-run aggregate supply according to the misperceptions theory?
Y = 6000 + 50(P - P^e)
Real business cycle theorists think that most business cycle fluctuations are caused by shocks to
the production function
According to real business cycle theory, which of the following events is least likely to cause a recession
A decline in the money supply
In recession years, ________ jobs are lost than created, and vacancies and job openings ________.
more; decline
Which of the following is an example of a productivity shock?
The introduction of new management techniques
According to classical economists, unemployment exists because
it takes time and effort for someone to find a job
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