11. Monetary policy is said to be accommodating when a. The central bank underta

Question

11. Monetary policy is said to be accommodating when
a. The central bank undertakes open market sales to fight inflation
b. The central bank responds to a tax increase by increasing money supply
c. The central bank responds to fiscal expansion by undertaking open market sales
d. In the course of fiscal expansion, the central bank increases money supply to prevent interest rates from rising
e. The central bank does not interfere in any way when the government undertakes fiscal policy

12. The Phillips curve shows a relationship between
a. The level of output and prices
b. The level of output and unemployment
c. The level of prices and employment
d. The rate of change in prices and the rate of unemployment
e. The level of prices and wage rate changes

13. The consumer price index (CPI) and the producer price index (PPI) differ from each other since
a. The PPI includes import goods but the CPI doesn't
b. The CPI usually rises sooner than the PPI
c. The composition of their market baskets is different
d. The PPI does not measure price increases of a fixed market basket
e. The CPI never overestimates inflation but the PPI often does

14. Assume the economy is at full employment and the Fed restricts money supply. What will be the effects on output and prices?
a. In the medium run output and prices will both decrease, but in the long run output will remain the same, while prices will decrease
b. Output will not be affected in the medium or long run, but prices will decrease in the long run
c. Output will decrease but only in the long run, while prices will decrease in the medium run and the long run
d. In the medium run output will remain the same, but in the long run both output and prices will decline
e. Output and prices will decline in the medium and long run

15. Which of the following is TRUE?
a. Core inflation excludes price changes for food and energy
b. Core inflation only includes price changes for food and energy
c. Core inflation is reported for the CPI but not the for the PCE deflator
d. The PCE deflator measures the average price change of a market basket of consumer goods
e. The PCE deflator only measures price changes in energy

Explanation / Answer

11.d 12.d I will post the reamining answers soon

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