Question 31(2 points] Assume that the economy is currently in a liquidity trap and the public is convinced by the central bank that there will be more ination in the future, then 0 a) the monetary policy can have an impact on real aggregates. O h} None of the answers are correct 0 c} the monetary policy can not have an impact on real aggregates. 0 d) the fiscal policy can not have an impact on real aggregates. 0 e] the fiscal policy can effectively reduce the short-term interest rate Question 32 (2 points] Suppose that the nominal interest rate is 1.5 and the long run inflation target is 2. In addition, suppose that a\"I =1, aI =05, Y = 510b, Y'=500b and i=3%. What is the recommended rate according the Taylor Rule? 0 a) 4% O h} None of the answers are correct 0 c} 3.5% 0 d) 2.5% 0.213% Question 33 (2 points] In the New Keynesian model, suppose that the output gap is initially zero, there is an increase in money demandI and the central bank wants to keep the output gap at zero. What happens? 0 a) Money supply goes up. 0 b} Employment goes down. 0 :1 None of the answers are correct 0 d) Investment goes down. 0 e] Consumption goes up. Question 34 (2 points] In the New Keynesian model, an increase in current total factor productivity 0 a) shifts output supply right and opens a positive output ga p. O b} None of the answers are correct 0 c} shifts output demand left and opens a negative output gap. 0 dl shifts output supply left and opens a negative output gap. 0 e] shifts output demand right and opens a positive output gap. Question 35 (2 points] If there is a liquidity trap in the New Keynesian model then 0 a) conventional monetary easing works well. 0 b} fiscal policy is irrelevant. O :1 prices cease to be sticky. 0 d) None of the answers are correct 0 e] government spending is trapped. Question 36 (2 points) In the Basic New Keynesian model, if anticipated future inflation decreases, ( a) output rises and inflation rises. ( b) None of the answers are correct O c) output and inflation stay the same. O d) output rises and inflation falls. O e) output stays the same and inflation falls. Question 37 (2 points) In the Basic New Keynesian Model, an unconventional policy that works in a liquidity trap is O a) a money supply increase. O b) an increase in the nominal interest rate. O c) forward guidance. O d) None of the answers are correct O e) a reduction in the nominal interest rate. Question 38 (2 points) A small open economy is an economy O a) whose firms and consumers are individually, but not collectively price takers. O b) in which both imports and exports are less than 5% of GDP. O c) that is open to ideas. O d) None of the answers are correct O e) whose firms and consumers are collectively, but not individually price takers. Question 39 (2 points) In a two-period SOE model, holding everything else constant, an increase in current- period income ( a) unambiguously increases the current account surplus. O b) unambiguously decreases the current account surplus. O c) has no effect on the current account surplus. O d) has an uncertain effect on the current account surplus. ( e) None of the answers are correct
