Question 1

Other things the same,if the central bank decreases the rate at which it increases the money supply,then in the long run

Accepted Answer

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

Question 2

The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment.He argues that if the Fed increased the money supply faster,more workers would find jobs.The Senator's argument

Accepted Answer

A)   is completely correct.
B)   is completely wrong.
C)   is true for the short run but not the long run.
D)   is true for the long run but not the short run.E) A) and B)
F) B) and C)

Question 3

Suppose the Federal Reserve pursues contractionary monetary policy.In the long run

Accepted Answer

A)   both inflation and the unemployment rate are higher than they were prior to the change in policy.
B)   inflation is higher and the unemployment rate is the same as it was prior to the change in policy.
C)   inflation is lower and the unemployment rate is lower than it was prior to the change in policy.
D)   inflation is lower and unemployment is the same as it was prior to the change in policy.E) All of the above
F) B) and C)

Question 4

If the sacrifice ratio is 2,reducing the inflation rate from 4 percent to 2 percent would

Accepted Answer

A)   cost 1 percent of annual output.
B)   cost 4 percent of annual output.
C)   imply that unemployment would rise by 1%.
D)   imply that unemployment would rise by 4%.E) A) and B)
F) B) and C)

Question 5

Figure 22-3.The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves.On the left-hand diagram,Y represents output and on the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 22-3.Assume the figure charts possible outcomes for the year 2018.In 2018,the economy is at point B on the left-hand graph,which corresponds to point B on the right-hand graph.Also,point A on the left-hand graph corresponds to A on the right-hand graph.The price level in the year 2018 is

Accepted Answer

A)   155.56.
B)   159.00.
C)   163.50.
D)   170.04.E) B) and D)
F) A) and B)

Question 6

An adverse supply shock shifts the short-run Phillips curve to the

Accepted Answer

A)   right.This means the unemployment rate is higher at each inflation rate.
B)   right.This means the unemployment rate is lower at each inflation rate.
C)   left.This means the unemployment rate is higher at each inflation rate.
D)   left.This means the unemployment rate is lower at each inflation rate.E) B) and C)
F) B) and D)

Question 7

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 8

If the government reduced the minimum wage and pursued contractionary monetary policy,then in the long run

Accepted Answer

A)   both the unemployment rate and the inflation rate would be lower.
B)   the unemployment rate would be lower and the inflation rate would be higher.
C)   the unemployment rate would be higher and the inflation rate would be lower.
D)   the unemployment rate and the inflation rate would be higher.E) None of the above
F) B) and D)

Question 9

Other things the same,a decrease in aggregate demand decreases both inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 10

Short-run outcomes in the economy can be expressed in terms of output and the price level,or in terms of unemployment and inflation.

Accepted Answer

A) True 
 B)False

Question 11

Figure 22-8.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,policymakers will A)  ask whether the shift is temporary or permanent. B)  be concerned with how people adjust their expectations of inflation as a result of the shift. C)  face,as well,a decision as to whether to accommodate the shock. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" > 1 to PC2,policymakers will A)  ask whether the shift is temporary or permanent. B)  be concerned with how people adjust their expectations of inflation as a result of the shift. C)  face,as well,a decision as to whether to accommodate the shock. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 22-8.Faced with the shift of the Phillips curve from PC1 to PC2,policymakers will

Accepted Answer

A)   ask whether the shift is temporary or permanent.
B)   be concerned with how people adjust their expectations of inflation as a result of the shift.
C)   face,as well,a decision as to whether to accommodate the shock.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 12

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)   raises expected inflation so the short-run Phillips curve shifts right.
B)   raises expected inflation so the short-run Phillips curve shifts left.
C)   reduces expected inflation so the short-run Phillips curve shifts left.
D)   None of the above is correct.E) None of the above
F) B) and C)

Question 14

Closely watched indicators such as the inflation rate and unemployment are released each month by the

Accepted Answer

A)   Bureau of the Budget.
B)   Bureau of Labor Statistics.
C)   Department of the Treasury.
D)   President's Council of Economic Advisors.E) B) and C)
F) A) and B)

Question 15

An adverse supply shock will cause output

Accepted Answer

A)   and prices to rise.
B)   and prices to fall.
C)   to rise and prices to fall.
D)   to fall and prices to rise.E) B) and C)
F) B) and D)

Question 16

As the aggregate demand curve shifts to the right,what happens to the price level and output? What do these changes imply happens to the inflation rate and the unemployment rate?

Accepted Answer

The price level and output ris...

Question 17

According to the Phillips curve,policymakers would reduce inflation but raise unemployment if they

Accepted Answer

A)   decreased the money supply.
B)   increased government expenditures.
C)   decreased taxes.
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 18

An adverse supply shock causes output to

Accepted Answer

A)   rise.To counter this a central bank would increase the money supply.
B)   rise.To counter this a central bank would decrease the money supply.
C)   fall.To counter this a central bank would increase the money supply.
D)   fall.To counter this a central bank would decrease the money supply.E) B) and D)
F) A) and C)

Question 19

In 2007 and 2008 households and firms reduced desired expenditures.During the same period inflation fell and unemployment rose.

Accepted Answer

A)   The change in inflation,but not the change in unemployment is consistent with what a given short-run Phillips curve implies.
B)   The change in unemployment,but not the change in inflation is consistent with what a given short-run Phillips curve implies.
C)   Both the change in inflation and the change in unemployment are consistent with what a given short-run Phillips curve implies.
D)   Neither the change in inflation nor the change in unemployment are consistent with what a given short-run Phillips curve implies.E) B) and D)
F) B) and C)

Question 20

According to Friedman and Phelps,the unemployment rate is above the natural rate when actual inflation

Accepted Answer

A)   is greater than expected inflation.
B)   is less than expected inflation.
C)   equals expected inflation.
D)   low whether its greater than or less than expected.E) A) and B)
F) A) and C)

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

Correct Answer
verified

Other things the same,a decrease in aggregate demand decreases both inflation and unemployment.

Correct Answer
verified

If the government reduced the minimum wage and pursued contractionary monetary policy,then in the long run

Correct Answer
verified

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Correct Answer
verified

Suppose the Federal Reserve pursues contractionary monetary policy.In the long run

Correct Answer
verified

Closely watched indicators such as the inflation rate and unemployment are released each month by the

Correct Answer
verified

According to the Phillips curve,policymakers would reduce inflation but raise unemployment if they

Correct Answer
verified

The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment.He argues that if the Fed increased the money supply faster,more workers would find jobs.The Senator's argument

Correct Answer
verified

An adverse supply shock will cause output

Correct Answer
verified

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Correct Answer
verified

Figure 22-8.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." -Refer to Figure 22-8.Faced with the shift of the Phillips curve from PC₁ to PC₂,policymakers will

Correct Answer
verified

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

Correct Answer
verified

As the aggregate demand curve shifts to the right,what happens to the price level and output? What do these changes imply happens to the inflation rate and the unemployment rate?

Correct Answer
verified
The price level and output ris...
View Answer

In 2007 and 2008 households and firms reduced desired expenditures.During the same period inflation fell and unemployment rose.

Correct Answer
verified

According to Friedman and Phelps,the unemployment rate is above the natural rate when actual inflation

Correct Answer
verified

Other things the same,if the central bank decreases the rate at which it increases the money supply,then in the long run

Correct Answer
verified

Short-run outcomes in the economy can be expressed in terms of output and the price level,or in terms of unemployment and inflation.

Correct Answer
verified

An adverse supply shock shifts the short-run Phillips curve to the

Correct Answer
verified

If the sacrifice ratio is 2,reducing the inflation rate from 4 percent to 2 percent would

Correct Answer
verified

An adverse supply shock causes output to

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

Other things the same,a decrease in aggregate demand decreases both inflation and unemployment.

Correct AnswerverifiedShow Answer

If the government reduced the minimum wage and pursued contractionary monetary policy,then in the long run

Correct AnswerverifiedShow Answer

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Correct AnswerverifiedShow Answer

Suppose the Federal Reserve pursues contractionary monetary policy.In the long run

Correct AnswerverifiedShow Answer

Closely watched indicators such as the inflation rate and unemployment are released each month by the

Correct AnswerverifiedShow Answer

According to the Phillips curve,policymakers would reduce inflation but raise unemployment if they

Correct AnswerverifiedShow Answer

The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment.He argues that if the Fed increased the money supply faster,more workers would find jobs.The Senator's argument

Correct AnswerverifiedShow Answer

An adverse supply shock will cause output

Correct AnswerverifiedShow Answer

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Correct AnswerverifiedShow Answer

Figure 22-8.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." -Refer to Figure 22-8.Faced with the shift of the Phillips curve from PC1 to PC2,policymakers will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As the aggregate demand curve shifts to the right,what happens to the price level and output? What do these changes imply happens to the inflation rate and the unemployment rate?

Correct AnswerverifiedThe price level and output ris...View AnswerShow Answer

In 2007 and 2008 households and firms reduced desired expenditures.During the same period inflation fell and unemployment rose.

Correct AnswerverifiedShow Answer

According to Friedman and Phelps,the unemployment rate is above the natural rate when actual inflation

Correct AnswerverifiedShow Answer

Other things the same,if the central bank decreases the rate at which it increases the money supply,then in the long run

Correct AnswerverifiedShow Answer

Short-run outcomes in the economy can be expressed in terms of output and the price level,or in terms of unemployment and inflation.

Correct AnswerverifiedShow Answer

An adverse supply shock shifts the short-run Phillips curve to the

Correct AnswerverifiedShow Answer

If the sacrifice ratio is 2,reducing the inflation rate from 4 percent to 2 percent would

Correct AnswerverifiedShow Answer

An adverse supply shock causes output to

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Figure 22-8.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." -Refer to Figure 22-8.Faced with the shift of the Phillips curve from PC₁ to PC₂,policymakers will

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The price level and output ris...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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