Question 1

Friedman and Phelps argued

Accepted Answer

A)  that in the long run, monetary growth did not influence those factors that determine the economy's unemployment rate.
B)  that the Phillips curve could be exploited in the long run by using monetary, but not fiscal policy.
C)  that the short-run Phillips curve was very steep, but not vertical.
D)  that there was neither a short-run nor long-run tradeoff between inflation and unemployment.E) All of the above
F) B) and C)

Question 2

There is a

Accepted Answer

A)  short-run tradeoff between inflation and unemployment.
B)  short-run tradeoff between the actual unemployment rate and the natural rate of unemployment.
C)  long-run tradeoff between inflation and unemployment.
D)  long-run tradeoff between the actual unemployment rate and the natural rate of unemployment.E) A) and B)
F) A) and C)

Question 3

Figure 35-4. The left-hand graph shows a short-run aggregate-supply (SRAS)  curve and two aggregate-demand (AD)  curves. On the left-hand diagram, the price level is measured on the vertical axis; on the right-hand diagram, the inflation rate is measured on the vertical axis.  
-Refer to Figure 35-4. What is measured along the horizontal axis of the left-hand graph?

Accepted Answer

A)  the wage rate
B)  the inflation rate
C)  output
D)  the interest rateE) A) and C)
F) All of the above

Question 4

Other things constant, which of the following would reduce unemployment and raise inflation?

Accepted Answer

A)  businesses become more optimistic about the future of the economy
B)  because of high growth abroad, net exports rise
C)  the government cuts taxes
D)  All of the above are correct.E) All of the above
F) A) and C)

Question 5

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

Accepted Answer

A)  Teresa reads in the newspaper that the central bank recently raised the money supply.
B)  Jackie gets fewer job offers.
C)  Miguel makes larger increases in the prices at his health food store.
D)  Julie's nominal wage increase is larger.E) A) and B)
F) B) and C)

Question 6

If a central bank reduced inflation by 4 percentage points and this made output fall by 5 percent for one year and 3 percent for another year and the unemployment rate rise 2.5 percent above its natural rate for one year and 1.5 percent above its natural rate for another year, the sacrifice ratio was

Accepted Answer

A)  1.
B)  2.
C)  3.
D)  None of the above is correct.E) All of the above
F) C) and D)

Question 7

According to the Phillips curve, which fiscal policies can be used to reduce unemployment in the short run?

Accepted Answer

An increase in gover...

Question 8

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) None of the above
F) C) and D)

Question 9

Which of the following would cause the price level to rise and output to fall in the short run?

Accepted Answer

A)  an increase in the money supply
B)  a decrease in the money supply
C)  an adverse supply shock
D)  a favorable supply shockE) All of the above
F) A) and C)

Question 10

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Accepted Answer

A) True 
 B)False

Question 11

If asset prices fall and inflation expectations remain unchanged, what happens to inflation and unemployment? Defend your answer.

Accepted Answer

Inflation falls and unemployment rises. ...

Question 12

Refer to Monetary Policy in Mokania. The Bank of Mokania reduced inflation to its announced goal of 5%. However, people were expecting inflation to fall to 7% and there was a favorable supply shock. In the short run which of the following made unemployment lower than otherwise?

Accepted Answer

A)  both people expecting inflation to fall to 7% instead of 5%, and the favorable supply shock
B)  neither people expecting inflation to fall to 7% instead of 5%, and the favorable supply shock
C)  only the favorable supply shock
D)  only people expecting inflation to fall to 7% instead of 5%E) A) and B)
F) All of the above

Question 13

For many years country A has had a lower unemployment rate than country B. According to the long-run Phillips curve which of the following could explain this? Country A has

Accepted Answer

A)  maintained a higher money supply growth rate.
B)  maintained a lower money supply growth rate.
C)  a higher minimum wage than country B.
D)  a lower minimum wage than country B.E) All of the above
F) B) and C)

Question 14

In the equation,
​
Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) ,
​
The variable a is a parameter that measures how much

Accepted Answer

A)  actual inflation responds to expected inflation.
B)  expected inflation responds to actual inflation.
C)  the natural rate of unemployment responds to unexpected inflation.
D)  actual unemployment responds to unexpected inflation.E) B) and D)
F) None of the above

Question 15

If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same, then policymakers

Accepted Answer

A)  can not exploit a tradeoff between inflation and unemployment in either the short or long run.
B)  can exploit a tradeoff between inflation and unemployment in the short run but not in the long run.
C)  can exploit a tradeoff between inflation and unemployment in both the short run and the long run.
D)  can exploit a tradeoff between inflation and unemployment in the long run, but not the short run.E) All of the above
F) C) and D)

Question 16

The position of the long-run Phillips curve depends on

Accepted Answer

A)  the inflation rate and the natural rate of unemployment.
B)  the inflation rate but not the natural rate of unemployment.
C)  the natural rate of unemployment, but not the inflation rate.
D)  neither the natural rate of unemployment nor the inflation rate.E) B) and D)
F) B) and C)

Question 17

The misery index is calculated as the

Accepted Answer

A)  inflation rate plus the unemployment rate.
B)  unemployment rate minus the inflation rate.
C)  actual inflation rate minus the expected inflation rate.
D)  natural unemployment rate times the inflation rateE) All of the above
F) B) and C)

Question 18

Figure 35-8
Use this graph to answer the questions below. 
-Refer to figure 35-8. If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy, in the short run the economy moves to

Accepted Answer

A)  3% unemployment and 5% inflation. In the long run the economy moves to 5% unemployment and 5% inflation.
B)  3% unemployment and 5% inflation. In the long run the economy moves to 5% unemployment and 3% inflation.
C)  7% unemployment and 3% inflation. In the long run the economy moves to 5% unemployment and 5% inflation.
D)  7% unemployment and 3% inflation. In the long run the economy moves to 5% unemployment and 3% inflation.E) None of the above
F) All of the above

Question 19

Disinflation is defined as a

Accepted Answer

A)  zero rate of inflation.
B)  constant rate of inflation.
C)  reduction in the rate of inflation.
D)  negative rate of inflation.E) A) and D)
F) B) and C)

Question 20

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) All of the above
F) None of the above

Exam 35: The Short-Run Tradeoff Between Inflation and Unemployment

Correct Answer
verified

Figure 35-8 Use this graph to answer the questions below. -Refer to figure 35-8. If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy, in the short run the economy moves to

Correct Answer
verified

Correct Answer
verified

Disinflation is defined as a

Correct Answer
verified

If asset prices fall and inflation expectations remain unchanged, what happens to inflation and unemployment? Defend your answer.

Correct Answer
verified
Inflation falls and unemployment rises. ...
View Answer

According to the Phillips curve, which fiscal policies can be used to reduce unemployment in the short run?

Correct Answer
verified
An increase in gover...
View Answer

In the equation, Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) , The variable a is a parameter that measures how much

Correct Answer
verified

Refer to Monetary Policy in Mokania. The Bank of Mokania reduced inflation to its announced goal of 5%. However, people were expecting inflation to fall to 7% and there was a favorable supply shock. In the short run which of the following made unemployment lower than otherwise?

Correct Answer
verified

Other things constant, which of the following would reduce unemployment and raise inflation?

Correct Answer
verified

The position of the long-run Phillips curve depends on

Correct Answer
verified

Which of the following would cause the price level to rise and output to fall in the short run?

Correct Answer
verified

There is a

Correct Answer
verified

The misery index is calculated as the

Correct Answer
verified

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Correct Answer
verified

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

Correct Answer
verified

Friedman and Phelps argued

Correct Answer
verified

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

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

If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same, then policymakers

Correct Answer
verified

For many years country A has had a lower unemployment rate than country B. According to the long-run Phillips curve which of the following could explain this? Country A has

Correct Answer
verified

Exam 35: The Short-Run Tradeoff Between Inflation and Unemployment

Correct AnswerverifiedShow Answer

Figure 35-8 Use this graph to answer the questions below. -Refer to figure 35-8. If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy, in the short run the economy moves to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Disinflation is defined as a

Correct AnswerverifiedShow Answer

If asset prices fall and inflation expectations remain unchanged, what happens to inflation and unemployment? Defend your answer.

Correct AnswerverifiedInflation falls and unemployment rises. ...View AnswerShow Answer

According to the Phillips curve, which fiscal policies can be used to reduce unemployment in the short run?

Correct AnswerverifiedAn increase in gover...View AnswerShow Answer

In the equation, ​ Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) , ​ The variable a is a parameter that measures how much

Correct AnswerverifiedShow Answer

Refer to Monetary Policy in Mokania. The Bank of Mokania reduced inflation to its announced goal of 5%. However, people were expecting inflation to fall to 7% and there was a favorable supply shock. In the short run which of the following made unemployment lower than otherwise?

Correct AnswerverifiedShow Answer

Other things constant, which of the following would reduce unemployment and raise inflation?

Correct AnswerverifiedShow Answer

The position of the long-run Phillips curve depends on

Correct AnswerverifiedShow Answer

Which of the following would cause the price level to rise and output to fall in the short run?

Correct AnswerverifiedShow Answer

There is a

Correct AnswerverifiedShow Answer

The misery index is calculated as the

Correct AnswerverifiedShow Answer

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Friedman and Phelps argued

Correct AnswerverifiedShow Answer

Which of the following would we not expect if government policy moved the economy up along a given short-run Phillips curve?

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

If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same, then policymakers

Correct AnswerverifiedShow Answer

For many years country A has had a lower unemployment rate than country B. According to the long-run Phillips curve which of the following could explain this? Country A has

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Inflation falls and unemployment rises. ...
View Answer

Correct Answer
verified
An increase in gover...
View Answer

In the equation, Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) , The variable a is a parameter that measures how much

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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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