ECS4861-25-Y Welcome Message Assessment 1
QUIZ
Started on Wednesday, 7 May 2025, 6:27 PM
State Finished
Completed on Wednesday, 7 May 2025, 6:52 PM
Time taken 25 mins 1 sec
Marks 50.00/50.00
Grade 100.00 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
Which of the following describes how people acquire information according to the rational expectations hypothesis?
They ignore historic data because this is already reflected in prices.
They ignore publicly available information because this is already reflected in prices.
They search for information up to the point where
Correct. Information search is costly so optimizing economic
agents will only expend resources up to the point at which the
the expected marginal cost of further information
expected marginal benefit equals the cost thereof.
equals the expected marginal value thereof.
Only new information is taken into account in decision-making.
Your answer is correct.
See Snowdon and Vane (2005: 225-230); The Economist (1984); Maddock & Carter (1982).
The correct answer is:
They search for information up to the point where the expected marginal cost of further information equals the expected
marginal value thereof.
,Question 2
Correct
Mark 1.00 out of 1.00
How do new classical models differ from orthodox monetarism?
New classical models assume rational rather than adaptive expectations.
New classical models do not permit 'money illusion', even in the short run.
In new classical models, systematic changes in monetary policy have no effect on real output.
All the statements are correct.
Your answer is correct.
Snowdon and Vane (2005: 163-187 and 242-247).
The correct answer is:
All the statements are correct.
,Question 3
Correct
Mark 1.00 out of 1.00
Involuntary unemployment increases...
due to nominal wage rigidity at w0.
because the lower real wage increases the supply of labour.
because the decrease in output Correct. At the real wage w0 firms would like to employ more labour but are
lowers the demand for labour. unwilling to do so because demand for their output has fallen..
All the statements are correct.
Your answer is correct.
See Snowdon and Vane (2005: 396-398).
The correct answer is:
because the decrease in output lowers the demand for labour.
Question 4
Correct
Mark 1.00 out of 1.00
Which of the following are most likely to lead to low inflation at the natural rate of unemployment?
Discretionary monetary policy.
Rational expectations.
Time inconsistency.
None of the A consistent rules-based monetary policy is most likely to establish central bank credibility
statements is and thereby lead to low inflation at the natural rate of unemployment over time.
correct.
Your answer is correct.
See Snowdon and Vane (2005: 257-262).
The correct answer is:
None of the statements is correct.
, Question 5
Correct
Mark 1.00 out of 1.00
According to the new Keynesian theory of the business cycle, which of the following would have been an appropriate policy to
counteract the increase in involuntary unemployment during the Great Recession?
Increased price competition between firms.
Creation of a more flexible labour market.
Nationalisation of key industries.
Increasing the budget New Keynesians recommend a combination of higher government spending / lower taxes
deficit and lowering (a larger budget deficit) and lower interest rates to counteract the sharp falls in aggregate
interest rates. demand experienced during severe recessions.
Your answer is correct.
See Snowdon and Vane (2005: 396 - 398).
The correct answer is:
Increasing the budget deficit and lowering interest rates.
Question 6
Correct
Mark 1.00 out of 1.00
In what respect is new Keynesian economics similar to orthodox Keynesian economics?
Stabilization policies can help the economy In new Keynesian economics, the effects of aggregate demand
adjust to aggregate demand shocks. shocks can be counteracted by monetary and/or fiscal policies.
Fiscal policy can be used to permanently increase output and employment.
Monetary policy can be used to permanently increase output and employment.
A Phillips curve trade-off between inflation and unemployment is possible in the long run.
Your answer is correct.
See Snowdon and Vane (2005: 363-366).
The correct answer is:
Stabilization policies can help the economy adjust to aggregate demand shocks.
QUIZ
Started on Wednesday, 7 May 2025, 6:27 PM
State Finished
Completed on Wednesday, 7 May 2025, 6:52 PM
Time taken 25 mins 1 sec
Marks 50.00/50.00
Grade 100.00 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
Which of the following describes how people acquire information according to the rational expectations hypothesis?
They ignore historic data because this is already reflected in prices.
They ignore publicly available information because this is already reflected in prices.
They search for information up to the point where
Correct. Information search is costly so optimizing economic
agents will only expend resources up to the point at which the
the expected marginal cost of further information
expected marginal benefit equals the cost thereof.
equals the expected marginal value thereof.
Only new information is taken into account in decision-making.
Your answer is correct.
See Snowdon and Vane (2005: 225-230); The Economist (1984); Maddock & Carter (1982).
The correct answer is:
They search for information up to the point where the expected marginal cost of further information equals the expected
marginal value thereof.
,Question 2
Correct
Mark 1.00 out of 1.00
How do new classical models differ from orthodox monetarism?
New classical models assume rational rather than adaptive expectations.
New classical models do not permit 'money illusion', even in the short run.
In new classical models, systematic changes in monetary policy have no effect on real output.
All the statements are correct.
Your answer is correct.
Snowdon and Vane (2005: 163-187 and 242-247).
The correct answer is:
All the statements are correct.
,Question 3
Correct
Mark 1.00 out of 1.00
Involuntary unemployment increases...
due to nominal wage rigidity at w0.
because the lower real wage increases the supply of labour.
because the decrease in output Correct. At the real wage w0 firms would like to employ more labour but are
lowers the demand for labour. unwilling to do so because demand for their output has fallen..
All the statements are correct.
Your answer is correct.
See Snowdon and Vane (2005: 396-398).
The correct answer is:
because the decrease in output lowers the demand for labour.
Question 4
Correct
Mark 1.00 out of 1.00
Which of the following are most likely to lead to low inflation at the natural rate of unemployment?
Discretionary monetary policy.
Rational expectations.
Time inconsistency.
None of the A consistent rules-based monetary policy is most likely to establish central bank credibility
statements is and thereby lead to low inflation at the natural rate of unemployment over time.
correct.
Your answer is correct.
See Snowdon and Vane (2005: 257-262).
The correct answer is:
None of the statements is correct.
, Question 5
Correct
Mark 1.00 out of 1.00
According to the new Keynesian theory of the business cycle, which of the following would have been an appropriate policy to
counteract the increase in involuntary unemployment during the Great Recession?
Increased price competition between firms.
Creation of a more flexible labour market.
Nationalisation of key industries.
Increasing the budget New Keynesians recommend a combination of higher government spending / lower taxes
deficit and lowering (a larger budget deficit) and lower interest rates to counteract the sharp falls in aggregate
interest rates. demand experienced during severe recessions.
Your answer is correct.
See Snowdon and Vane (2005: 396 - 398).
The correct answer is:
Increasing the budget deficit and lowering interest rates.
Question 6
Correct
Mark 1.00 out of 1.00
In what respect is new Keynesian economics similar to orthodox Keynesian economics?
Stabilization policies can help the economy In new Keynesian economics, the effects of aggregate demand
adjust to aggregate demand shocks. shocks can be counteracted by monetary and/or fiscal policies.
Fiscal policy can be used to permanently increase output and employment.
Monetary policy can be used to permanently increase output and employment.
A Phillips curve trade-off between inflation and unemployment is possible in the long run.
Your answer is correct.
See Snowdon and Vane (2005: 363-366).
The correct answer is:
Stabilization policies can help the economy adjust to aggregate demand shocks.
