Question 1

Suppose the Fed decreased the growth rate of the money supply.Which of the following would be lower in the long run?

Accepted Answer

A)  both the natural rate of unemployment and the inflation rate
B)  the natural rate of unemployment,but not the inflation rate
C)  the inflation rate,but not the natural rate of unemployment
D)  neither the natural unemployment rate nor the inflation rateE) None of the above
F) C) and D)

Question 2

If an increase in inflation permanently reduced unemployment,then

Accepted Answer

A)  money would not be neutral and the long-run Phillips curve would slope upward.
B)  money would not be neutral and the long-run Phillips curve would slope downward.
C)  money would be neutral and the long-run Phillips curve would slope upward.
D)  money would be neutral and the long-run Phillips curve would slope downward.E) A) and D)
F) B) and C)

Question 3

The long-run Phillips curve would shift to the right if

Accepted Answer

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

Question 4

If the Federal Reserve decreases the rate at which it increases the money supply,then unemployment is higher in

Accepted Answer

A)  the long run and the short run.
B)  the long run but not the short run.
C)  the short run but not the long run.
D)  neither the short run nor the long run.E) C) and D)
F) B) and C)

Question 5

If inflation is greater than expected,then the unemployment rate is

Accepted Answer

A)  above the natural rate.In the long run the short-run Phillips curve will shift right.
B)  above the natural rate.In the long run the short-run Phillips curve will shift left.
C)  below the natural rate.In the long run the short-run Phillips curve will shift right.
D)  below the natural rate.In the long run the short-run Phillips curve will shift left.E) All of the above
F) B) and D)

Question 6

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Accepted Answer

A)  the natural rate of unemployment and monetary growth.
B)  the natural rate of unemployment,but not monetary growth.
C)  monetary growth,but not the natural rate of unemployment.
D)  neither monetary growth nor the natural rate of unemployment.E) A) and C)
F) All of the above

Question 7

The long-run Phillips curve would shift left if

Accepted Answer

A)  the money supply increased or if the minimum wage was reduced.
B)  the money supply increased but not if the minimum wage was reduced.
C)  the minimum wage was reduced but not if the money supply increased.
D)  None of the above is correct.E) All of the above
F) A) and B)

Question 8

Which of the following is downward-sloping?

Accepted Answer

A)  both the long-run Phillips curve and the short-run Phillips curve
B)  neither the long-run Phillips curve nor the short-run Phillips curve
C)  the long-run Phillips curve,but not the short-run Phillips curve
D)  the short-run Phillips curve,but not the long-run Phillips curveE) B) and C)
F) B) and D)

Question 9

If people correctly anticipate that inflation will fall by 1%,then

Accepted Answer

A)  the short-run Phillips curve shifts right and unemployment is unchanged.
B)  the short-run Phillips curve shifts right and unemployment rises.
C)  the short-run Phillips curve shifts left and unemployment is unchanged.
D)  the short-run Phillips curve would shift left and unemployment falls.E) B) and D)
F) None of the above

Question 10

In the late 1960s,Milton Friedman and Edmund Phelps argued that

Accepted Answer

A)  the trade-off between inflation and unemployment did not apply in the long run This claim is consistent with monetary neutrality in the long run.
B)  the trade-off between inflation and unemployment did not apply in the long run.This claim is inconsistent with monetary neutrality in the long run.
C)  the trade-off between inflation and unemployment applied in both the short run and the long run.This claim is consistent with monetary neutrality in the long run.
D)  the trade-off between inflation and unemployment applied in both the short run and the long run.This claim is inconsistent with monetary neutrality in the long run.E) A) and B)
F) C) and D)

Question 11

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) C) and D)
F) B) and D)

Question 12

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

Accepted Answer

A)  Its position is determined primarily by monetary factors.
B)  If it shifts right,long-run aggregate supply shifts right.
C)  It cannot be changed by any government policy.
D)  Its position depends on the natural rate of unemployment.E) A) and D)
F) A) and B)

Question 13

Other things the same,in the long run a country that reduces the minimum wage from very high levels will have

Accepted Answer

A)  higher unemployment and lower inflation
B)  lower unemployment and higher inflation
C)  higher unemployment and the same level of inflation
D)  lower unemployment and the same level of inflationE) A) and B)
F) None of the above

Question 14

Which of the following implies that an increase in the money supply growth rate permanently changes the unemployment rate?

Accepted Answer

A)  both the long-run aggregate supply curve and the long-run Phillips curve
B)  the long-run aggregate supply curve,but not the long-run Phillips curve
C)  the long-run Phillips curve,but not the long-run aggregate supply curve
D)  neither the long-run Phillips curve nor the long-run aggregate supply curveE) All of the above
F) A) and C)

Question 15

In the long run,if the Fed increases the growth rate of the money supply,

Accepted Answer

A)  inflation will be higher.
B)  unemployment will be lower.
C)  real GDP will be higher.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 16

According to the long-run Phillips curve,in the long run monetary policy influences

Accepted Answer

A)  inflation but not the unemployment rate;this is consistent with classical theory.
B)  inflation but not the unemployment rate;this is inconsistent with classical theory.
C)  the unemployment rate but not inflation;this is consistent with classical theory.
D)  the unemployment rate but not inflation;this is inconsistent with classical theory.E) None of the above
F) A) and B)

Question 17

If a government redesigned its unemployment insurance programs so that the unemployed had greater incentives to quickly find appropriate jobs,then which of the following curves would shift right?

Accepted Answer

A)  the long-run Phillips curve and the long-run aggregate supply curve
B)  the long-run Phillips curve but not the long-run aggregate supply curve
C)  the long-run aggregate supply curve but not the long-run Phillips curve
D)  neither the long-run Phillips curve nor the long-run aggregate supply curveE) A) and B)
F) A) and C)

Question 18

In the long run,an increase in the money supply growth rate

Accepted Answer

A)  increases inflation and shifts the short-run Phillips curve right.
B)  increases inflation and shifts the short-run Phillips curve left.
C)  decreases inflation and shifts the short-run Philips curve right.
D)  decreases inflation and shifts the short-run Phillips curve left.E) A) and C)
F) All of the above

Question 19

According to Friedman and Phelps,policymakers face a tradeoff between inflation and unemployment

Accepted Answer

A)  only in the long run.
B)  only in the short run.
C)  in neither the long run nor short run.
D)  in both the short run and long run.E) A) and D)
F) B) and C)

Question 20

The equation,
​
Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) ,
​

Accepted Answer

A)  is the equation of the short-run Phillips curve.
B)  implies the short-run Phillips curve shifts every time there is a change in actual inflation.
C)  reflects the reasoning of Samuelson and Solow.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Exam 22: The Short Run Trade Off Between Inflation and Unemployment: Shifts in the Phillips Curve the Role of Expectations

Suppose the Fed decreased the growth rate of the money supply.Which of the following would be lower in the long run?

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

Correct AnswerverifiedShow Answer

Other things the same,in the long run a country that reduces the minimum wage from very high levels will have

Correct AnswerverifiedShow Answer

The long-run Phillips curve would shift to the right if

Correct AnswerverifiedShow Answer

According to Friedman and Phelps,policymakers face a tradeoff between inflation and unemployment

Correct AnswerverifiedShow Answer

If the Federal Reserve decreases the rate at which it increases the money supply,then unemployment is higher in

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The equation, ​ Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) , ​

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In the long run,if the Fed increases the growth rate of the money supply,

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In the long run,an increase in the money supply growth rate

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Which of the following is downward-sloping?

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If a government redesigned its unemployment insurance programs so that the unemployed had greater incentives to quickly find appropriate jobs,then which of the following curves would shift right?

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If people correctly anticipate that inflation will fall by 1%,then

Correct AnswerverifiedShow Answer

If inflation is greater than expected,then the unemployment rate is

Correct AnswerverifiedShow Answer

According to the long-run Phillips curve,in the long run monetary policy influences

Correct AnswerverifiedShow Answer

In the late 1960s,Milton Friedman and Edmund Phelps argued that

Correct AnswerverifiedShow Answer

If an increase in inflation permanently reduced unemployment,then

Correct AnswerverifiedShow Answer

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following implies that an increase in the money supply growth rate permanently changes the unemployment rate?

Correct AnswerverifiedShow Answer

The long-run Phillips curve would shift left if

Correct AnswerverifiedShow Answer

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The equation, Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) ,

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