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.Management Sciences
Category: Roots of Modern Macroeconomics
People are said to have rational expectations if they ?
A. assume that this year’s inflation rate will be the same as last year’s inflation rate
B. merely guess at the inflation rate.
C. assume that this year’s inflation rate will be equal to the average inflation rate over the past 10 years
D. Use all available information in forming their expectations.
A group of modern economists who believe that institutional factors and confidence strongly influence business behaviour and that expanding demand will usually increase output rather than prices are the ?
A. monetarists.
B. keynesians
C. post-keynesians
D. new classical school
The economists who emphasised wage flexibility as a solution for unemployment were ?
A. new-Keynesian.
B. post-Keynesian.
C. classical economists.
D. Keynesian.
Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are ?
A. market prices
B. sticky prices
C. fixed prices
D. regulatory prices
According of Keynes, the level of employment is determined by ?
A. the behaviour of trade unions.
B. the quantity of money
C. price and wages
D. the level of aggregate demand for goods and services
Rapid increase in the price level during periods of recession of high unemployment are known as ?
A. slump
B. inflation
C. stagflation
D. stagnation
The rational-expectation hypothesis suggests that the forecasts that people make concerning future inflation rates ?
A. consistently overestimate the actual rate of inflation in the future.
B. are always correct
C. consistently underestimate the actual rate of inflation in the future
D. are correct on average, but are subject to errors that are distributed randomly
The nation that the government can establish the macroeconomic is known as ?
A. fine tuning
B. monestarism
C. microeconomics foundations of macroeconomics
D. the classical model
According to classical models, the level of employment is determined primarily by ?
A. the level of aggregate demand for goods and services.
B. prices and wages
C. interest rates
D. the quantity of money
It is difficult to determine if the velocity of money is constant over time because ?
A. it is difficult to measure the value of nominal GDP over time
B. there has been very little fluctuation in the money supply over time.
C. it is difficult to measure the demand for money over time
D. whether velocity is constant or not may depend on how the money supply is measure.
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