Question 1

In the model of price setting, the demand for the firms product is:

Accepted Answer

A)  negatively related to real income in the economy.
B)  negatively to the firms price relative to the price level.
C)  negatively related to the real wage the firm pays.
D)  all of the above.

Question 2

In the long run in a model with sticky prices:

Accepted Answer

A)  prices will adjust.
B)  money is neutral.
C)  increase in prices reverse the short run effects.
D)  all of the above.

Question 3

In the model of price setting, the demand for the firm's price is:

Accepted Answer

A)  negatively related to the markup ratio.
B)  negatively related to the nominal wage the firm pays.
C)  negatively related to the firm's marginal product of labour.
D)  all of the above.

Question 4

In a model with sticky nominal wages an increase in the money supply will:

Accepted Answer

A)  raise the real wage.
B)  increase real output.
C)  decrease the labour input.
D)  all of the above.

Question 5

In the model with sticky prices, in the short run a positive monetary shock leads to:

Accepted Answer

A)  a decrease in household real money balances.
B)  an increase in household's demand for goods.
C)  a decrease in household's desired real money balances.
D)  all of the above.

Question 6

Menu costs are:

Accepted Answer

A)  the posted prices of a firm.
B)  the costs of changing prices.
C)  are set by the government.
D)  are the long run costs of the firm.

Question 7

In a new Keynesian model:

Accepted Answer

A)  money is procyclical and money is weakly procyclical in the data.
B)  the price level is countercyclical and the price level is countercyclical in the data.
C)  the average product of labour is countercyclical while the average product of labour is weakly procyclical in the data.
D)  all of the above.

Question 8

In the short run with a model with sticky prices a negative monetary surprise:

Accepted Answer

A)  increases labour demand.
B)  increases real output.
C)  decreases the real wage.
D)  all of the above.

Question 9

In a model with sticky prices, a positive monetary shock would cause households:

Accepted Answer

A)  to spend more to try to get rid of the excess money.
B)  to want to hold more money.
C)  to change optimal real money balances.
D)  all of the above.

Question 10

In the short run in a model with sticky prices, a monetary surprise affects labour demand and real output.

Accepted Answer

A) True 
 B)False

Question 11

In a new Keynesian model a temporary increase in output could be cause by:

Accepted Answer

A)  a positive monetary surprise.
B)  households becoming exogenously less thrifty.
C)  a negative shock to government purchases.
D)  all of the above.

Question 12

In a model of price setting what determines firm j's price?

Accepted Answer

The price of firm j is determined by the...

Question 13

In the model of price setting, the demand for the firm's price is:

Accepted Answer

A)  negatively related to the markup ratio.
B)  positively related to the nominal wage the firm pays.
C)  positively related to the firm's marginal product of labour.
D)  all of the above.

Question 14

In the short run in a model with sticky prices:

Accepted Answer

A)  the labour input is countercyclical.
B)  the average product of labour is procyclical.
C)  the real wage rate in procyclical.
D)  all of the above.

Question 15

In the long run in a model with sticky prices, a monetary surprise affects labour demand and real output.

Accepted Answer

A) True 
 B)False

Question 16

A firm's markup ratio is:

Accepted Answer

A)  its price relative to the price level.
B)  the price level relative to its marginal costs.
C)  it price relative to its marginal costs.
D)  its marginal cost relative to the price level.

Question 17

What are the effects of a monetary surprise in a model with sticky nominal wages?

Accepted Answer

A monetary surprise in a model...

Question 18

In the short run in a model with sticky prices:

Accepted Answer

A)  the labour input is procyclical.
B)  the average product of labour is countercyclical.
C)  the real wage rate in procyclical.
D)  all of the above.

Question 19

In a model with sticky nominal wages an increase in the money supply will:

Accepted Answer

A)  lower the real wage.
B)  decrease real output.
C)  decrease the labour input.
D)  all of the above.

Question 20

In a model with sticky nominal wages an increase in the money supply will:

Accepted Answer

A)  lower the real wage.
B)  increase real output.
C)  increase the labour input.
D)  all of the above.

Exam 17: Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

A firm's markup ratio is:

Correct AnswerverifiedShow Answer

In the model of price setting, the demand for the firm's price is:

Correct AnswerverifiedShow Answer

In the model of price setting, the demand for the firm's price is:

Correct AnswerverifiedShow Answer

In a model of price setting what determines firm j's price?

Correct AnswerverifiedThe price of firm j is determined by the...View AnswerShow Answer

In the model of price setting, the demand for the firms product is:

Correct AnswerverifiedShow Answer

In a model with sticky prices, a positive monetary shock would cause households:

Correct AnswerverifiedShow Answer

Menu costs are:

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In the long run in a model with sticky prices, a monetary surprise affects labour demand and real output.

Correct AnswerverifiedShow Answer

In a model with sticky nominal wages an increase in the money supply will:

Correct AnswerverifiedShow Answer

In the long run in a model with sticky prices:

Correct AnswerverifiedShow Answer

In the model with sticky prices, in the short run a positive monetary shock leads to:

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In a model with sticky nominal wages an increase in the money supply will:

Correct AnswerverifiedShow Answer

What are the effects of a monetary surprise in a model with sticky nominal wages?

Correct AnswerverifiedA monetary surprise in a model...View AnswerShow Answer

In a new Keynesian model:

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In the short run with a model with sticky prices a negative monetary surprise:

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In the short run in a model with sticky prices:

Correct AnswerverifiedShow Answer

In a new Keynesian model a temporary increase in output could be cause by:

Correct AnswerverifiedShow Answer

In the short run in a model with sticky prices, a monetary surprise affects labour demand and real output.

Correct AnswerverifiedShow Answer

In a model with sticky nominal wages an increase in the money supply will:

Correct AnswerverifiedShow Answer

In the short run in a model with sticky prices:

Correct AnswerverifiedShow Answer

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The price of firm j is determined by the...
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A monetary surprise in a model...
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