Podcast
Questions and Answers
According to the Classical model, what is the duration of time for which the unemployment rate can differ from its natural level?
According to the Classical model, what is the duration of time for which the unemployment rate can differ from its natural level?
- A few months
- A very brief time (correct)
- Indefinitely
- Several years
What is the underlying assumption about people's expectations in the Classical model?
What is the underlying assumption about people's expectations in the Classical model?
- People have rational expectations and try to anticipate policy changes (correct)
- People are completely unaware of policy changes
- People's expectations are influenced by their emotions
- People are easily fooled by policymakers
According to the Keynesian model, what is the reason why unemployment may differ from the natural rate for some time?
According to the Keynesian model, what is the reason why unemployment may differ from the natural rate for some time?
- Because it takes time for prices and expected prices to adjust (correct)
- Because policymakers are unable to implement effective policies
- Because people have rational expectations
- Because the natural rate of unemployment is unattainable
What is a key characteristic of a 'liquidity trap' in a Keynesian economy?
What is a key characteristic of a 'liquidity trap' in a Keynesian economy?
What is the role of the expected rate of inflation in the Phillips curve, according to the Keynesian model?
What is the role of the expected rate of inflation in the Phillips curve, according to the Keynesian model?
Can policymakers choose the optimal combination of unemployment and inflation, according to the Keynesian model?
Can policymakers choose the optimal combination of unemployment and inflation, according to the Keynesian model?
What is the primary goal of the Constant Money Stock rule in Monetarist economics?
What is the primary goal of the Constant Money Stock rule in Monetarist economics?
What is a factor that affects people's ability to get information and make adjustments to their economic positions?
What is a factor that affects people's ability to get information and make adjustments to their economic positions?
What is the main difference between the Classical and Keynesian models in terms of the Phillips curve?
What is the main difference between the Classical and Keynesian models in terms of the Phillips curve?
What is a characteristic of the Natural Rate of Unemployment?
What is a characteristic of the Natural Rate of Unemployment?
What is a consequence of people hoarding money in a recession?
What is a consequence of people hoarding money in a recession?
What is a characteristic of Japan's economy in the 1990s?
What is a characteristic of Japan's economy in the 1990s?
What is the shape of the LR Phillips curve when inflation is fully anticipated?
What is the shape of the LR Phillips curve when inflation is fully anticipated?
According to the Keynesian view, what is the relationship between the rate of inflation and the levels of employment and output?
According to the Keynesian view, what is the relationship between the rate of inflation and the levels of employment and output?
What is the effect on unemployment when the government implements an expansionary policy in the Keynesian model?
What is the effect on unemployment when the government implements an expansionary policy in the Keynesian model?
What happens to the level of money wage as employment increases in the Keynesian model?
What happens to the level of money wage as employment increases in the Keynesian model?
What is the direction of the Phillips curve implied by the Keynesian model?
What is the direction of the Phillips curve implied by the Keynesian model?
What is the effect on output when the government implements an expansionary policy in the Keynesian model?
What is the effect on output when the government implements an expansionary policy in the Keynesian model?
