Policy makers are said to “accommodate” an adverse supply shock if they ?

Related Mcqs:

1. If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?

   A. an increase in the level of output
   B. a decrease in the unemployment rate
   C. an increase in the rate of inflation
   D. All of these answers

2. According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?

   A. The economy will experience an increase in inflation
   B. The economy will experience a decrease in inflation
   C. Inflation will be unaffected if price expectations are unchanging
   D. None of these answers

3. Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should ?

   A. decrease government spending Which the shifts the aggregate demand curve to the left
   B. decrease taxes, which shifts the aggregate demand curve to the right
   C. decrease taxes, which shifts the aggregate demand curve to the left
   D. decrease government spending which shifts the aggregate demand curve to the right

4. A critic of “Shock therapy” to transition economies. Vladamir Popov, contends that shock therapists put a heavy emphasis on ?

   A. introducing the reform package at once to ensure that it became too late and costly to reverse the reforms
   B. agricultural reform rather than industrial reforms to overcome food insecurity
   C. the creation of a small-scale private sector ans small independent banks
   D. attempts to gradually remake institutions

5. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?

   A. People will reduce their price expectations and the short run aggregate supply will shift right
   B. People will raise their price expectations and aggregate demand will shift left
   C. People will raise their price expectations and the short run aggregate supply will shift left
   D. People will reduce their price expectations and aggregate demand will shift right

6. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ?

   A. Shift aggregate demand to the left
   B. Shift short run aggregate supply to the left
   C. shift aggregate demand to the right
   D. shift short-run aggregate supply to the right

7. The idea that the money supply should change to accommodate changes in aggregate demand is associated with the idea of ?

   A. Margaret Thatcher
   B. Ronald Reagan
   C. Milton Friedman
   D. John Maynard Keynes

8. Some economists and third-world policy makers criticize MNCs arguing that they have a negative effect on the developing country because they ?

   I- increasing the LDC’s technological dependence on foreign sources resulting in less technological innovation by local workers
   II- Hamper local entrepreneurship and investment in infant industries
   III- increase unemployment rates from unsuitable technology
   IV- Restrict subsidiary exports when they undercut the market of the parent company

   A. I and II only
   B. III and IV only
   C. I, II and III only
   D. I, II, III and IV

9. In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _______ against European currencies?

   A. decrease; depreciate
   B. decrease; appreciate
   C. increase; depreciate
   D. increase; appreciate

10. According to the model of aggregate supply and aggregate demand in the long run an increase in the money supply should cause ?

    A. Prices to rise and output to rise
    B. Price to fall and output to remain unchanged
    C. Prices to fall and output to fall
    D. prices to rise and output to remain unchanged