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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 alays, include at least ______ consecuti!e "uarters o#

declining real $D%.A) to

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 asD) is less !olatile t'an

*. +'e statistical relations'ip beteen c'anges in real $D% and c'anges in t'eunemployment 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 assumes t'at, it' no c'ange in

unemployment, real $D% normally gros by ( percent o!er a year. # t'e

unemployment rate rose by 2 percentage points o!er a year, un/s la predicts t'atreal $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 assumes t'at, it' no c'ange in

unemployment, real $D% normally gros by ( percent o!er a year. # t'e

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C) 'olds appro&imately in t'e s'ort run but not at all in t'e long run.

D) 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 nominalD) neit'er real nor nominal

1(. A di##erence beteen 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 sticy 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 sticy 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. # 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 decreaseD) decrease7 increase

14. tabili;ation policy:

A) aims at eeping output and employment at t'eir natural rates.

B) alays succeeds in eeping output and employment at t'eir natural rates.

C) is generally ine##ecti!e.

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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

89

10

11

12

13

14

15

1617

18

19

20

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"nswer .ey to Ch% 9

1. D2. A

(. B

*. D0. A

3. D

4. D8. B

. C

15. B

11. B12. A

1(. C

1*. B

10. C13. D

14. A18. D

1. A

25. C

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