Question 1

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 2

Data for the United States traced out an almost perfect Phillips curve for much of the

Accepted Answer

A)   1960s.
B)   1970s.
C)   1980s.
D)   1990s.E) A) and C)
F) All of the above

Question 3

Economist A.W. Phillips found a negative correlation between

Accepted Answer

A)   output and unemployment.
B)   unemployment and the interest rate.
C)   output and the interest rate.
D)   wage inflation and unemployment.E) B) and D)
F) B) and C)

Question 4

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

Question 5

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

Question 6

A central bank announces it will decrease the inflation rate by 10 percentage points. People are skeptical of the announcement, but do expect the central bank will reduce inflation by 5 percentage points and so expected inflation falls by 5 percentage points. If the central bank decreases inflation by only 3 percentage points then the unemployment rate will fall.

Accepted Answer

A) True 
 B)False

Question 7

A. W. Phillips' findings were based on data

Accepted Answer

A)   from 1861-1957 for the United Kingdom.
B)   from 1861-1957 for the United States.
C)   mostly from the post-World War II period in the United Kingdom.
D)   mostly from the post-World War II period in the United States.E) A) and D)
F) B) and D)

Question 8

Figure 35-1. The left-hand graph shows a short-run aggregate-supply (SRAS)  curve and two aggregate-demand (AD)  curves. On the right-hand diagram, U represents the unemployment rate.  
-Refer to Figure 35-1. What is measured along the vertical axis of the right-hand graph?

Accepted Answer

A)   the interest rate
B)   the inflation rate
C)   the wage rate
D)   the growth rate of the nominal money supplyE) B) and D)
F) None of the above

Question 9

An increase in the price of oil shifts the

Accepted Answer

A)   short-run Phillips curve right and the unemployment rate rises.
B)   short-run Phillips curve right and the unemployment rate falls.
C)   short-run Phillips curve left and the unemployment rate rises.
D)   short-run Phillips curve left and the unemployment rate falls.E) A) and C)
F) A) and B)

Question 10

As an economist working for a U.S. government agency you determine that a particular country has a sacrifice ratio of 3. Policy-makers in that country are thinking of lowering the inflation rate from 10% to 4%. Is this sacrifice ratio higher or lower than the typical estimate? From your numbers, what is the amount of output that will be lost for this country to reduce its inflation rate?

Accepted Answer

A)   The sacrifice ratio is higher than the typical estimate. It will cost 30% of annual output to reach the new inflation target.
B)   The sacrifice ratio is higher than the typical estimate. It will cost 18% of annual output to reach the new inflation target.
C)   The sacrifice ratio is lower than the typical estimate. It will cost 30% of annual output to reach the new inflation target.
D)   The sacrifice ratio is lower than the typical estimate. It will cost 18% of annual output to reach the new inflation target.E) B) and D)
F) B) and C)

Question 11

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

Question 12

Friedman and Phelps concluded that

Accepted Answer

A)   in the long run the Phillips curve is downward sloping, which is consistent with classical theory.
B)   in the long run the Philips curve is downward sloping, which is inconsistent with classical theory.
C)   in the long run the Phillips curve is vertical, which is consistent with classical theory.
D)   in the long run the Phillips curve is vertical, which is inconsistent with classical theory.E) B) and D)
F) A) and B)

Question 13

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 right-hand graph?

Accepted Answer

A)   the interest rate
B)   the price level
C)   the government's budget deficit as a percent of GDP
D)   the unemployment rateE) C) and D)
F) B) and C)

Question 14

The proliferation of Internet usage serves as an example of a favorable supply shock.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Which of the following would not be associated with a favorable supply shock?

Accepted Answer

A)   the short-run Phillips curve shifts left
B)   unemployment falls
C)   the price level rises
D)   output rises.E) C) and D)
F) B) and C)

Question 17

If more firms chose to pay efficiency wages, which of the following would shift to the right?

Accepted Answer

A)   both 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 D)
F) B) and C)

Question 18

A movement to the right along a given short-run Phillips curve could be caused by

Accepted Answer

A)   an increase in the natural rate of unemployment or expansionary monetary policy.
B)   expansionary monetary policy, but not an increase in the natural rate of unemployment.
C)   an increase in the natural rate of unemployment or a contractionary monetary policy.
D)   contractionary monetary policy, but not an increase in the natural rate of unemployment.E) None of the above
F) B) and D)

Question 19

Figure 35-6
Use the graph below to answer the following questions. 
-Refer to Figure 35-6. If the economy starts at C and the money supply growth rate increases, in the long run the economy

Accepted Answer

A)   stays at C.
B)   moves to B.
C)   moves to F.
D)   None of the above is consistent wit an increase in the money supply growth rate.E) C) and D)
F) A) and D)

Question 20

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) A) and B)
F) A) and C)

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

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

Correct Answer
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Correct Answer
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Friedman and Phelps concluded that

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

A. W. Phillips' findings were based on data

Correct Answer
verified

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

Correct Answer
verified

Economist A.W. Phillips found a negative correlation between

Correct Answer
verified

Figure 35-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate. -Refer to Figure 35-1. What is measured along the vertical axis of the right-hand graph?

Correct Answer
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A movement to the right along a given short-run Phillips curve could be caused by

Correct Answer
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Correct Answer
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Which of the following is downward-sloping?

Correct Answer
verified

Which of the following would not be associated with a favorable supply shock?

Correct Answer
verified

The proliferation of Internet usage serves as an example of a favorable supply shock.

Correct Answer
verified

Data for the United States traced out an almost perfect Phillips curve for much of the

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If more firms chose to pay efficiency wages, which of the following would shift to the right?

Correct Answer
verified

An increase in the price of oil shifts the

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

Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6. If the economy starts at C and the money supply growth rate increases, in the long run the economy

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Friedman and Phelps concluded that

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

A. W. Phillips' findings were based on data

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economist A.W. Phillips found a negative correlation between

Correct AnswerverifiedShow Answer

Figure 35-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate. -Refer to Figure 35-1. What is measured along the vertical axis of the right-hand graph?

Correct AnswerverifiedShow Answer

A movement to the right along a given short-run Phillips curve could be caused by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is downward-sloping?

Correct AnswerverifiedShow Answer

Which of the following would not be associated with a favorable supply shock?

Correct AnswerverifiedShow Answer

The proliferation of Internet usage serves as an example of a favorable supply shock.

Correct AnswerverifiedShow Answer

Data for the United States traced out an almost perfect Phillips curve for much of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If more firms chose to pay efficiency wages, which of the following would shift to the right?

Correct AnswerverifiedShow Answer

An increase in the price of oil shifts the

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

Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6. If the economy starts at C and the money supply growth rate increases, in the long run the economy

Correct AnswerverifiedShow Answer

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