.png){kind=logo}
ECN 211 - All Exam Questions - Ballinger
- ASU West
If there is crowding out... Fiscal expansion (Lowers/Raises) interest rates, which
(Increases/Reduces) the net increase in aggregate demand - ✔✔Raises & Reduces
According to the theory of rational expectations, if households and firms believe the Federal
Reserve's contractionary policy to be credible and revise expectations to expect a lower inflation
rate - ✔✔Inflation will fall and there would be less unemployment than the traditional sacrifice
ratio predicts
Which of the following would cause a shift in the short-run aggregate-supply curve, but no
change in the long-run aggregate-supply curve? - ✔✔A change in price expectation
Question 6. According to the theory of rational expectations, if households and firms believe the
Federal Reserve's contractionary policy to be credible and revise expectations to expect a lower
inflation rate, then - ✔✔Inflation will fall and there would be less unemployment than the
traditional sacrifice ratio predicts
8. Would the federal government cutting taxes to stimulate the economy be classified as fiscal
policy? - ✔✔Yes
9. What would a decrease in the price level do to the short-run aggregate supply curve? -
✔✔Shift the short-run supply curve to the right
11. Under the assumptions of the fisher effect and monetary neutrality, if the money supply
growth rate falls then - ✔✔The nominal interest rate falls, but the real interest rate does not.
12. The costs of inflation include: - ✔✔Shoeleather costs, Menu costs, Misallocation of
resources from relative price variability
.png)