Question 1

Which of the following is correct according to the long-run Phillips curve?

Accepted Answer

A)   No government policy,including changes in monetary growth,can change the natural rate of unemployment.
B)   Changes in the money supply growth rate is the only government policy that can change the natural rate of unemployment.
C)   Monetary policy cannot change the natural rate of unemployment,but other government policies can.
D)   Monetary policy and other government policies can both change the natural rate of unemployment.E) A) and D)
F) A) and C)

Question 2

Suppose that the economy is at an inflation rate such that unemployment is above the natural rate.How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer.

Accepted Answer

If unemployment is above its natural rat...

Question 3

The natural rate of unemployment

Accepted Answer

A)   is constant over time.
B)   varies over time,but can't be changed by the government.
C)   is the socially desirable rate of unemployment.
D)   does not depend on the rate at which the Fed increases the money supply.E) A) and D)
F) C) and D)

Question 4

The long-run Phillips curve would shift left if

Accepted Answer

A)   the money supply growth rate increased or labor markets become more flexible.
B)   the money supply growth rate increased but not if labor markets become more flexible.
C)   labor markets become more flexible but not if the money supply growth rate increased.
D)   None of the above is correct.E) None of the above
F) B) and D)

Question 5

Figure 22-6
Use the two graphs in the diagram to answer the following questions.

-Refer to Figure 22-6.Starting from C and 3,in the long run,a decrease in money supply growth moves the economy to

Accepted Answer

A)   A and 1.
B)   back to C and 3.
C)   D and 4.
D)   F and 5.E) B) and C)
F) A) and B)

Question 6

A decrease in expected inflation shifts

Accepted Answer

A)   the long-run Phillips curve left.
B)   the short-run Phillips curve left.
C)   neither the short-run nor long-run Phillips curve left.
D)   both the short-run and long-run Phillips curve left.E) B) and C)
F) None of the above

Question 7

Which of the following shifts aggregate supply to the right?

Accepted Answer

A)   a decline in the price of imported natural resources
B)   a technological advance
C)   an older labor force that leaves jobs less frequently
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 8

When aggregate demand shifts right along the short-run aggregate supply curve,unemployment

Accepted Answer

A)   falls,so there are upward pressures on wages and prices.
B)   falls,so there are downward pressures on wages and prices.
C)   rises,so there are upward pressures on wages and prices.
D)   rises,so there are downward pressures on wages and prices.E) A) and B)
F) A) and C)

Question 9

Phillips found a negative relation between

Accepted Answer

A)   output and unemployment.
B)   output and employment.
C)   wage inflation and unemployment.
D)   None of the above is correct.E) B) and C)
F) A) and C)

Question 10

The equation, Unemployment rate = Natural rate of unemployment - a *(ctual inflation - Expected inflation) ,

Accepted Answer

A)   is the equation of the short-run Phillips curve.
B)   implies there can be no stable short-run Phillips curve.
C)   reflects the reasoning of Friedman and Phelps.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 11

Figure 22-2
Use the pair of diagrams below to answer the following questions.

-Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,a decrease in aggregate demand moves the economy to

Accepted Answer

A)   A and 2.
B)   D and 3.
C)   E and 3.
D)   None of the above is correct.E) A) and B)
F) None of the above

Question 12

In 1980,the U.S.economy had an inflation rate of

Accepted Answer

A)   about 1 percent and an unemployment rate of about 7 percent.
B)   less than 4 percent and an unemployment rate of less than 6 percent.
C)   less than 7 percent and an unemployment rate of about 9 percent.
D)   more than 9 percent and an unemployment rate of about 7 percent.E) A) and B)
F) A) and C)

Question 13

If a central bank announced that it was going to decrease inflation by 5%,people revised their inflation expectations downward by 4%,and the central bank only lowered inflation by 1%,the short run Phillips curve would shift

Accepted Answer

A)   right and unemployment would rise.
B)   right and unemployment would fall.
C)   left and unemployment would rise.
D)   left and unemployment would fall.E) B) and D)
F) B) and C)

Question 14

One determinant of the natural rate of unemployment is the

Accepted Answer

A)   rate of growth of the money supply.
B)   minimum wage rate.
C)   expected inflation rate.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 15

The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the

Accepted Answer

A)   short run,and the natural rate is constant over time.
B)   long run,and the natural rate is constant over time.
C)   short run,and the natural rate changes over time.
D)   long run,and the natural rate changes over time.E) A) and B)
F) A) and C)

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

Which of the following shifts aggregate supply to the right?

Correct Answer
verified

When aggregate demand shifts right along the short-run aggregate supply curve,unemployment

Correct Answer
verified

Figure 22-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,a decrease in aggregate demand moves the economy to

Correct Answer
verified

If a central bank announced that it was going to decrease inflation by 5%,people revised their inflation expectations downward by 4%,and the central bank only lowered inflation by 1%,the short run Phillips curve would shift

Correct Answer
verified

Phillips found a negative relation between

Correct Answer
verified

The long-run Phillips curve would shift left if

Correct Answer
verified

The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the

Correct Answer
verified

Suppose that the economy is at an inflation rate such that unemployment is above the natural rate.How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer.

Correct Answer
verified
If unemployment is above its natural rat...
View Answer

The natural rate of unemployment

Correct Answer
verified

A decrease in expected inflation shifts

Correct Answer
verified

In 1980,the U.S.economy had an inflation rate of

Correct Answer
verified

Which of the following is correct according to the long-run Phillips curve?

Correct Answer
verified

The equation, Unemployment rate = Natural rate of unemployment - a *(ctual inflation - Expected inflation) ,

Correct Answer
verified

One determinant of the natural rate of unemployment is the

Correct Answer
verified

Figure 22-6 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 22-6.Starting from C and 3,in the long run,a decrease in money supply growth moves the economy to

Correct Answer
verified

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

Which of the following shifts aggregate supply to the right?

Correct AnswerverifiedShow Answer

When aggregate demand shifts right along the short-run aggregate supply curve,unemployment

Correct AnswerverifiedShow Answer

Figure 22-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,a decrease in aggregate demand moves the economy to

Correct AnswerverifiedShow Answer

If a central bank announced that it was going to decrease inflation by 5%,people revised their inflation expectations downward by 4%,and the central bank only lowered inflation by 1%,the short run Phillips curve would shift

Correct AnswerverifiedShow Answer

Phillips found a negative relation between

Correct AnswerverifiedShow Answer

The long-run Phillips curve would shift left if

Correct AnswerverifiedShow Answer

The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the

Correct AnswerverifiedShow Answer

Suppose that the economy is at an inflation rate such that unemployment is above the natural rate.How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer.

Correct AnswerverifiedIf unemployment is above its natural rat...View AnswerShow Answer

The natural rate of unemployment

Correct AnswerverifiedShow Answer

A decrease in expected inflation shifts

Correct AnswerverifiedShow Answer

In 1980,the U.S.economy had an inflation rate of

Correct AnswerverifiedShow Answer

Which of the following is correct according to the long-run Phillips curve?

Correct AnswerverifiedShow Answer

The equation, Unemployment rate = Natural rate of unemployment - a *(ctual inflation - Expected inflation) ,

Correct AnswerverifiedShow Answer

One determinant of the natural rate of unemployment is the

Correct AnswerverifiedShow Answer

Figure 22-6 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 22-6.Starting from C and 3,in the long run,a decrease in money supply growth moves the economy to

Correct AnswerverifiedShow Answer

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If unemployment is above its natural rat...
View Answer

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