Question: please I didn't understand these multiple choice q Question 1 If the government appoints an inflation-hating central banker, in the long term inflation will fall

please I didn't understand these multiple choice q

Question 1

If the government appoints an inflation-hating central banker, in the long term

  1. inflation will fall and unemployment will rise.
  2. inflation will fall and nominal interest rates will fall.
  3. inflation will fall and nominal interest rates will rise.
  4. inflation will remain unchanged but unemployment will rise.
  5. None of the above.

Question 2

In an economy where most agents have lagged expectations about the inflation rate,

  1. people will always forecast the inflation rate perfectly accurately.
  2. people will make systematic forecasting errors if the inflation rate is increasing.
  3. people will not always forecast accurately, but they will not make systematic mistakes.
  4. the inflation rate will be much lower than if they have rational expectations.
  5. unemployment will normally be low.

Question 3

Suppose in the AS-AD model the economy starts at the full employment level of output. In the short term, a decrease in taxes will cause

  1. an increase in inflation and an increase in employment.
  2. an increase in inflation and no change in employment.
  3. a decrease in inflation and a decrease in employment.
  4. no change in inflation and no change in employment.
  5. no change in inflation and an increase in employment.

Question 4

Suppose in the AS-AD model the economy starts at the full employment level of output. In the long term, a decrease in taxes will cause

  1. an increase in inflation and an increase in employment.
  2. an increase in inflation and no change in employment.
  3. a decrease in inflation and a decrease in employment.
  4. no change in inflation and no change in employment.
  5. no change in inflation and an increase in employment.

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