Money Supply – Principles of Macroeconomics Exam

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Money Supply, Short-Run, Monetary Policy, Principles of Macroeconomics Final Exam

The key words in this Macroeconomics course include Money Supply, Expectations Theory, Unemployment, Short-Run, Monetary Policy, Phillips Curve, Monetary Neutrality, Central Bank, Federal Reserve, Economy, Inflation, Expansionary Monetary, Contractionary Monetary, Principles of Macroeconomics.


With adjusting expectations, the equilibrium at the natural rate of unemployment is obtained by

rational expectations theory.

movement along the short-run Phillips curve.

a fixed short-run Phillips curve.

fixed prices.

shifts in the short-run Phillips curve.


Monetary neutrality is

the short-run inverse relationship between inflation and unemployment rates.

the idea that the money supply does not affect real economic variables.

when a central bank acts to increase the money supply.

the combination of high unemployment and high inflation.

when a central bank acts to decrease the mon supply.


Federal Reserve chairman Ben Bernanke’s move toward greater openness in the 2010s reflected which view of macroeconomics?

Monetary policy should be passive.

Only rational expectations matter.

Expectations matter, whether adaptive or rational.

Monetary policy should be active.

Expectations do not matter.


By shifting aggregate demand, monetary policy can affect ________ and ________.

money supply; real gross domestic product (GDP)

money supply; unemployment

real gross domestic product (GDP); interest rates

interest rates; unemployment

real gross domestic product (GDP); unemployment


________ policy is when a central bank acts to decrease the money supply in an effort to control an economy that is expanding too quickly.

Expansionary monetary

Countercyclical monetary

Contractionary fiscal

Contractionary monetary

Expansionary fiscal


Unexpected inflation harms workers and other resource suppliers who have ________ prices in the ________ run.

fixed; short

fixed; long

flexible; medium

flexible; short

flexible; short


With adjusting expectations, the equilibrium at the natural rate of unemployment is obtained by

rational expectations theory.

movement along the short-run Phillips curve.

a fixed short-run Phillips curve.

fixed prices.

shifts in the short-run Phillips curve.


Federal Reserve chairman Ben Bernanke’s move toward greater openness in the 2010s reflected which view of macroeconomics?

Monetary policy should be passive.

Only rational expectations matter.

Expectations matter, whether adaptive or rational.

Monetary policy should be active.

Expectations do not matter.