Homework on Chapter 9 ECO62 Spring 2011 Udayan Roy It is due on ednesday!

"pri# $% &#ease show your answers on the answer sheet% &#ease hand in on#y the answer sheet% Name: __________________________ Date: _____________ 1. Business cycles are: A) regular and predictable. B) irregular but predictable. C) regular but unpredictable. D) irregular and unpredictable. 2. Recessions typically, but not al ays, include at least ______ consecuti!e "uarters o# declining real $D%. A) t o B) #our C) si& D) eig't (. )!er t'e business cycle, in!estment spending ______ consumption spending. A) is in!ersely correlated it' B) is more !olatile t'an C) 'as about t'e same !olatility as D) is less !olatile t'an *. +'e statistical relations'ip bet een c'anges in real $D% and c'anges in t'e unemployment rate is called: A) t'e %'illips cur!e. B) t'e ,olo residual. C) t'e -is'er e##ect. D) ).un/s la . 0. +'e !ersion o# ).un/s la studied in C'apter 1 assumes t'at, it' no c'ange in unemployment, real $D% normally gro s by ( percent o!er a year. 2# t'e unemployment rate rose by 2 percentage points o!er a year, ).un/s la predicts t'at real $D% ould: A) decrease by 1 percent. B) decrease by 2 percent. C) decrease by ( percent. D) increase by 1 percent. 3. +'e !ersion o# ).un/s la studied in C'apter 1 assumes t'at, it' no c'ange in unemployment, real $D% normally gro s by ( percent o!er a year. 2# t'e
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A) B) C) D)

unemployment rate #ell by 1 percentage point o!er a year, ).un/s la predicts t'at real $D% ould: decrease by 1 percent. decrease by 2 percent. increase by * percent. increase by 0 percent.

4. A decline in t'e 2nde& o# ,upplier Deli!eries is typically an indicator o# a #uture ______ in economic production, and a narro ing o# t'e interest rate spread bet een t'e 156year +reasury note and (6mont' +reasury bill is typically an indicator o# a #uture ______ in economic production. A) increase7 slo do n B) increase7 increase C) slo do n7 increase D) slo do n7 slo do n 8. +'e inde& o# leading indicators compiled by t'e Con#erence Board includes 15 data series t'at are used to #orecast economic acti!ity about ______ in ad!ance. A) one mont' B) si& to nine mont's C) one to t o years D) #i!e to ten years 1. 9easures o# a!erage or. ee.s and o# suppliers/ deli!eries :!endor per#ormance) are included in t'e inde& o# leading indicators, because s'orter or. ee.s tend to indicate ______ #uture economic acti!ity, and slo er deli!eries tend to indicate ______ #uture economic acti!ity. A) stronger7 stronger B) stronger7 ea.er C) ea.er7 stronger D) ea.er7 ea.er 15. 9ost economists belie!e t'at prices are: A) #le&ible in t'e s'ort run but many are stic.y in t'e long run. B) #le&ible in t'e long run but many are stic.y in t'e s'ort run. C) stic.y in bot' t'e s'ort and long runs. D) #le&ible in bot' t'e s'ort and long runs. 11. 9ost economists belie!e t'at t'e classical dic'otomy: A) 'olds appro&imately in bot' t'e s'ort run and t'e long run. B) 'olds appro&imately in t'e long run but not at all in t'e s'ort run.

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C) D)

'olds appro&imately in t'e s'ort run but not at all in t'e long run. does not 'old e!en appro&imately in eit'er t'e long run or t'e s'ort run.

12. 9onetary neutrality, t'e irrele!ance o# t'e money supply in determining !alues o# ______ !ariables, is generally t'oug't to be a property o# t'e economy in t'e long6run. A) real B) nominal C) real and nominal D) neit'er real nor nominal 1(. A di##erence bet een t'e economic long run and t'e s'ort run is t'at: A) t'e classical dic'otomy 'olds in t'e s'ort run but not in t'e long run. B) monetary and #iscal policy a##ect output only in t'e long run. C) demand can a##ect output and employment in t'e s'ort run, 'ereas supply is t'e ruling #orce in t'e long run. D) prices and ages are stic.y in t'e long run only. 1*. +'e s'ort run re#ers to a period: A) o# se!eral days. B) during 'ic' prices are stic.y and unemployment may occur. C) during 'ic' capital and labor are #ully employed. D) during 'ic' t'ere are no #luctuations. 10. +'e long run re#ers to a period: A) o# decades. B) during 'ic' capital and labor are sometimes not #ully employed. C) during 'ic' prices are #le&ible. D) during 'ic' output de!iates #rom t'e #ull6employment le!el. 13. 2# a s'ort6run e"uilibrium occurs at a le!el o# output belo t'e natural rate, t'en in t'e transition to t'e long run, prices ill ______ and output ill ______. A) increase7 increase B) decrease7 decrease C) increase7 decrease D) decrease7 increase 14. ,tabili;ation policy: A) aims at .eeping output and employment at t'eir natural rates. B) al ays succeeds in .eeping output and employment at t'eir natural rates. C) is generally ine##ecti!e.

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D)

does more 'arm t'an good.

18. A #a!orable supply s'oc. occurs 'en: A) en!ironmental protection la s raise costs o# production. B) t'e -ed increases t'e money supply. C) unions pus' ages up. D) an oil cartel brea.s up and oil prices #all. 11. )n t o occasions in t'e 1145s: A) orld oil prices rose rapidly, in#lation as 'ig', and t'e unemployment rate as 'ig'. B) orld oil prices rose rapidly, in#lation as moderate, and t'e unemployment rate as 'ig'. C) orld oil prices rose rapidly, in#lation as 'ig', and t'e unemployment rate as moderate. D) oil prices rose rapidly, but t'e -ed used monetary policy to curb in#lation. 25. 2n t'e mid61185s, oil prices ______, in#lation as ______, and t'e unemployment rate ______. A) rose rapidly7 'ig'7 rose B) rose slo ly7 moderate7 as 'ig' C) #ell7 lo 7 declined D) #ell7 lo 7 rose

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"nswer Sheet 'or Homework $ (On Chapter 9) ECO62 Spring 2011 Udayan Roy
*ame+ ,,,,,,,,,,,,,,,,,,,,,,,,,, -ate+ ,,,,,,,,,,,,,
HW 5 (on chapter 9)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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"nswer .ey to Ch% 9

1. 2. (. *. 0. 3. 4. 8. 1. 15. 11. 12. 1(. 1*. 10. 13. 14. 18. 11. 25. D A B D A D D B C B B A C B C D A D A C

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