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21) Those economists who attempt to explain why wages and

Question : 21) Those economists who attempt to explain why wages and : 1940425

21) Those economists who attempt to explain why wages and prices do not freely adjust would most likely be

A) real business cycle theorists.

B) new classical economists.

C) new Keynesian economists.

D) new growth theorists.

E) none of the above

22) The existence of menu costs are often used to explain why

A) fiscal and monetary policies should be relatively effective.

B) the price of services, like those provided by restaurants and barbers, rise at a faster rate than the price of goods, like automobiles and clothing.

C) food prices tend to rise disproportionately rapidly in the consumer price index.

D) price and wage adjustments will be relatively rapid.

E) people prefer to look backward, instead of forward, when anticipating the future.

23) A core belief of modern macroeconomics is that in the short run,

A) fiscal policy is more effective in changing output than monetary policy.

B) monetary policy is more effective in changing output than fiscal policy.

C) fluctuations in aggregate demand affect unemployment.

D) fluctuations in aggregate demand have no impact on the price level.

E) the economy always operates at or near the natural rate of unemployment.

24) A core belief of modern macroeconomics is that in the long run,

A) a change in money growth will affect the level of output, but not its composition.

B) a change in money growth will affect the composition of output, but not its level.

C) output can deviate permanently from its natural level.

D) a change in fiscal policy will not affect the composition of output.

E) greater saving will result in greater output.

25) One of the most important areas of disagreement among macroeconomists today is over

A) the slope of the IS curve.

B) the slope of the LM curve.

C) the definition of consumption spending.

D) the definition of government spending.

E) none of the above

26) "Effective demand" represents which of the following?

A) money demand

B) demand for exports

C) domestic demand

D) the demand for labor

E) aggregate demand

27) Liquidity preference refers to the theory of

A) money demand.

B) consumption.

C) investment.

D) expectations.

28) The neoclassical synthesis had emerged by what decade?

A) 1930s

B) 1940s

C) 1950s

D) 1960s

E) 1990s

29) The IS-LM model was developed by

A) Friedman and Phelps.

B) Hicks and Hansen.

C) Modigliani and Friedman.

D) Lucas and Sargent.

E) none of the above

30) The theories of consumption were developed by

A) Friedman and Phelps

B) Hicks and Hansen

C) Modigliani and Friedman

D


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