Question 1

Just as the aggregate-supply curve slopes upward only in the short run, the trade-off between inflation and unemployment holds only in the short run.

Accepted Answer

A) True 
 B)False

Question 2

A given short-run Phillips curve shows that an increase in the inflation rate will be accompanied by a lower unemployment rate in the short run.

Accepted Answer

A) True 
 B)False

Question 3

Figure 17-8. The left-hand graph shows a short-run aggregate-supply (SRAS)  curve and two aggregate-demand (AD)  curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."
 1 to PC2, the curve will soon shift back to PC1 if people perceive the A)  increase in the inflation rate as a temporary aberration. B)  economic boom as a temporary aberration. C)  increase in the inflation rate as a sign of a new era of higher inflation. D)  economic boom as a sign of a new era of higher economic growth. " class="answers-bank-image d-inline" rel="preload" > 1 to PC2, the curve will soon shift back to PC1 if people perceive the A)  increase in the inflation rate as a temporary aberration. B)  economic boom as a temporary aberration. C)  increase in the inflation rate as a sign of a new era of higher inflation. D)  economic boom as a sign of a new era of higher economic growth. " class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 17-8. Subsequent to the shift of the Phillips curve from PC1 to PC2, the curve will soon shift back to PC1 if people perceive the

Accepted Answer

A)   increase in the inflation rate as a temporary aberration.
B)   economic boom as a temporary aberration.
C)   increase in the inflation rate as a sign of a new era of higher inflation.
D)   economic boom as a sign of a new era of higher economic growth.E) B) and D)
F) All of the above

Question 4

The analysis of Friedman and Phelps can be summarized in the following equation where a is positive number:

Accepted Answer

A)   Unemployment Rate = Natural Rate of Unemployment - a(Actual Inflation - Expected Inflation) .
B)   Unemployment Rate = Natural Rate of Unemployment - a(Expected Inflation - Actual Inflation) .
C)   Unemployment Rate = Expected Rate of Inflation - a(Actual Inflation - Expected Inflation) .
D)   Unemployment Rate = Actual Rate of Inflation - a(Actual Unemployment - Expected Unemployment) .E) All of the above
F) A) and B)

Question 5

If the Fed increases the growth rate of the money supply, in the long run which of the following is unchanged?

Accepted Answer

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

Question 6

If the long-run Phillips curve shifts to the right, then for any given rate of money growth and inflation the economy has

Accepted Answer

A)   higher unemployment and lower output.
B)   higher unemployment and higher output.
C)   lower unemployment and lower output.
D)   lower unemployment and higher output.E) B) and C)
F) A) and D)

Question 7

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Accepted Answer

A) True 
 B)False

Question 8

Figure 17-2
Use the pair of diagrams below to answer the following questions.
 
-Refer to Figure 17-2. 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) B) and C)
F) A) and B)

Question 9

In the late 1970s, proponents of rational expectations argued that

Accepted Answer

A)   the Fed should not attempt to aggressively fight inflation.
B)   the sacrifice ratio was smaller than previously thought.
C)   the short run was relatively long.
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 10

In 2009 Congress and President Obama approved tax cuts and increased government spending. According to the short-run Phillips curve these policies should have

Accepted Answer

A)   raised unemployment and inflation.
B)   raised unemployment and reduced inflation.
C)   reduced unemployment and raised inflation.
D)   reduced unemployment and inflation.E) All of the above
F) C) and D)

Question 11

Friedman argued that the Fed could use monetary policy to peg

Accepted Answer

A)   nominal exchange rates.
B)   the level of real GDP.
C)   the rate of unemployment.
D)   None of the above is correct.E) A) and D)
F) All of the above

Question 12

If the central bank decreases the money supply, then in the short run prices

Accepted Answer

A)   rise and unemployment falls.
B)   fall and unemployment rises.
C)   and unemployment rise.
D)   and unemployment fall.E) A) and D)
F) A) and B)

Question 13

If the natural rate of unemployment falls,

Accepted Answer

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

Question 14

If inflation expectations rise, the short-run Phillips curve shifts

Accepted Answer

A)   right, so that at any inflation rate unemployment is higher in the short run than before.
B)   left, so that at any inflation rate unemployment is higher in the short run than before.
C)   right, so that at any inflation rate unemployment is lower in the short run than before.
D)   left, so that at any inflation rate unemployment is lower in the short run than before.E) All of the above
F) C) and D)

Question 15

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

Question 16

In his famous article published in an economics journal in 1958, A.W. Phillips

Accepted Answer

A)   used data for the United States to show a negative relationship between the rate of change of the U.S. consumer price index and the U.S. unemployment rate.
B)   used data for the United States to show a negative relationship between the rate of change of wages in the U.S. and the U.S. unemployment rate.
C)   used data for the United Kingdom to show a negative relationship between the rate of change of the U.K. consumer price index and the U.K. unemployment rate.
D)   used data for the United Kingdom to show a negative relationship between the rate of change of wages in the U.K. and the U.K. unemployment rate.E) All of the above
F) A) and D)

Question 17

Figure 17-5
Use the graph below to answer the following questions.
 
-Refer to Figure 17-5. Curve 2 is the

Accepted Answer

A)   long-run Phillips curve.
B)   short-run Phillips curve.
C)   long-run aggregate demand curve.
D)   short-run aggregate demand curve.E) A) and B)
F) A) and C)

Question 18

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

Accepted Answer

A)   unemployment and prices rise.
B)   unemployment rises and prices fall.
C)   unemployment falls and prices rise.
D)   unemployment and prices fall.E) None of the above
F) B) and D)

Question 19

Samuelson and Solow believed that the Phillips curve

Accepted Answer

A)   implied that low unemployment was associated with low inflation.
B)   indicated that the aggregate supply and aggregate demand model was incorrect.
C)   offered policymakers a menu of possible economic outcomes from which to choose.
D)   All of the above are correct.E) All of the above
F) A) and D)

Question 20

The arguments of Friedman and Phelps would suggest that other things the same, a country that pursues a disinflationary policy that the public does not find completely credible

Accepted Answer

A)   should not see an increase in the unemployment rate even in the short run.
B)   will having rising unemployment for a while, but then return to the natural rate of unemployment.
C)   will have a permanently higher unemployment rate.
D)   None of the above is suggested by the arguments of Friedman and Phelps.E) B) and D)
F) A) and D)

Exam 17: The Short-Run Trade-Off Between Inflation and Unemployment

One determinant of the natural rate of unemployment is the

Correct Answer
verified

Samuelson and Solow believed that the Phillips curve

Correct Answer
verified

Correct Answer
verified

If inflation expectations rise, the short-run Phillips curve shifts

Correct Answer
verified

Figure 17-5 Use the graph below to answer the following questions. -Refer to Figure 17-5. Curve 2 is the

Correct Answer
verified

The analysis of Friedman and Phelps can be summarized in the following equation where a is positive number:

Correct Answer
verified

The arguments of Friedman and Phelps would suggest that other things the same, a country that pursues a disinflationary policy that the public does not find completely credible

Correct Answer
verified

Just as the aggregate-supply curve slopes upward only in the short run, the trade-off between inflation and unemployment holds only in the short run.

Correct Answer
verified

In 2009 Congress and President Obama approved tax cuts and increased government spending. According to the short-run Phillips curve these policies should have

Correct Answer
verified

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Correct Answer
verified

A given short-run Phillips curve shows that an increase in the inflation rate will be accompanied by a lower unemployment rate in the short run.

Correct Answer
verified

In the late 1970s, proponents of rational expectations argued that

Correct Answer
verified

If the Fed increases the growth rate of the money supply, in the long run which of the following is unchanged?

Correct Answer
verified

If the natural rate of unemployment falls,

Correct Answer
verified

If the central bank decreases the money supply, then in the short run prices

Correct Answer
verified

Friedman argued that the Fed could use monetary policy to peg

Correct Answer
verified

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

Correct Answer
verified

If the long-run Phillips curve shifts to the right, then for any given rate of money growth and inflation the economy has

Correct Answer
verified

In his famous article published in an economics journal in 1958, A.W. Phillips

Correct Answer
verified

Figure 17-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 17-2. 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

Exam 17: The Short-Run Trade-Off Between Inflation and Unemployment

One determinant of the natural rate of unemployment is the

Correct AnswerverifiedShow Answer

Samuelson and Solow believed that the Phillips curve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If inflation expectations rise, the short-run Phillips curve shifts

Correct AnswerverifiedShow Answer

Figure 17-5 Use the graph below to answer the following questions. -Refer to Figure 17-5. Curve 2 is the

Correct AnswerverifiedShow Answer

The analysis of Friedman and Phelps can be summarized in the following equation where a is positive number:

Correct AnswerverifiedShow Answer

The arguments of Friedman and Phelps would suggest that other things the same, a country that pursues a disinflationary policy that the public does not find completely credible

Correct AnswerverifiedShow Answer

Just as the aggregate-supply curve slopes upward only in the short run, the trade-off between inflation and unemployment holds only in the short run.

Correct AnswerverifiedShow Answer

In 2009 Congress and President Obama approved tax cuts and increased government spending. According to the short-run Phillips curve these policies should have

Correct AnswerverifiedShow Answer

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Correct AnswerverifiedShow Answer

A given short-run Phillips curve shows that an increase in the inflation rate will be accompanied by a lower unemployment rate in the short run.

Correct AnswerverifiedShow Answer

In the late 1970s, proponents of rational expectations argued that

Correct AnswerverifiedShow Answer

If the Fed increases the growth rate of the money supply, in the long run which of the following is unchanged?

Correct AnswerverifiedShow Answer

If the natural rate of unemployment falls,

Correct AnswerverifiedShow Answer

If the central bank decreases the money supply, then in the short run prices

Correct AnswerverifiedShow Answer

Friedman argued that the Fed could use monetary policy to peg

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the long-run Phillips curve shifts to the right, then for any given rate of money growth and inflation the economy has

Correct AnswerverifiedShow Answer

In his famous article published in an economics journal in 1958, A.W. Phillips

Correct AnswerverifiedShow Answer

Figure 17-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 17-2. 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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified