Filters
Question type
Study Flashcards

What would NOT be associated with a favourable supply shock?


A) short-run Phillips curve shifts right
B) unemployment rises
C) price level falls
D) output falls

E) None of the above
F) All of the above

Correct Answer

verifed

verified

Suppose the Bank of Canada reduces inflation 2 percentage points, and this makes output fall 10 percentage points and unemployment rises 4 percentage points. What is the sacrifice ratio?


A) 1/5
B) 2
C) 5
D) 8

E) A) and D)
F) A) and C)

Correct Answer

verifed

verified

Suppose the natural rate of unemployment is 6 percent, the expected inflation is 2 percent, and the constant "a" in the short-run Phillips curve equation is 0.8. Draw the long-run and short-run Phillips curves. What is the inflation rate corresponding to the intersection of the two curves?

Correct Answer

verifed

verified

The short-run Phillips curve is describe...

View Answer

Suppose a war disrupts the supply of oil to the country. What would we expect to happen to the short-run aggregate-supply curve, the short-run Phillips curve, and the long-run Phillips curve?


A) We would expect the short-run aggregate-supply curve, short-run Phillips curve, and long-run Phillips curve to shift left.
B) We would expect the short-run aggregate-supply curve, short-run Phillips curve, and long-run Phillips curve to shift right.
C) We would expect the short-run aggregate-supply curve to shift left, and the short-run Phillips curve and long-run Phillips curve to shift right.
D) We would expect the short-run aggregate-supply curve to shift left, the short-run Phillips curve to shift right, and the long-run Phillips curve to be unaffected.

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

Correct Answer

verifed

verified

In the late 1960s, which of the following was published by economist Edmund Phelps?


A) a paper that argued that there was no long-run tradeoff between inflation and unemployment
B) a paper that disproved Friedman's claim that monetary policy was ineffective in controlling inflation
C) a paper that showed the optimal point on the Phillips curve was at an unemployment rate of 5 percent and an inflation rate of 2 percent
D) a paper that argued that the Phillips curve was stable and that it would not shift

E) None of the above
F) B) and D)

Correct Answer

verifed

verified

Which change will move the economy to a point on the Phillips curve where unemployment is lower?


A) lower inflation
B) increased government spending
C) a decrease the money supply
D) higher expectations about inflation

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

Correct Answer

verifed

verified

If the Bank of Canada announced a policy to reduce inflation and people found it credible, what would happen to the short-run Phillips curve and the sacrifice ratio?


A) The short-run Phillips curve would shift right, and the sacrifice ratio would fall.
B) The short-run Phillips curve would shift right, and the sacrifice ratio would rise.
C) The short-run Phillips curve would shift left, and the sacrifice ratio would fall.
D) The short-run Phillips curve would shift left, and the sacrifice ratio would rise.

E) All of the above
F) A) and B)

Correct Answer

verifed

verified

Figure 16-1 Figure 16-1 -Refer to the Figure 16-1. If the economy starts at c and 1, then in the short run, an increase in taxes moves the economy to where? A) b and 2 B) d and 3 C) e and 2 D) b and 3 -Refer to the Figure 16-1. If the economy starts at c and 1, then in the short run, an increase in taxes moves the economy to where?


A) b and 2
B) d and 3
C) e and 2
D) b and 3

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

Correct Answer

verifed

verified

The long-run response to a decrease in the growth rate of the money supply is shown by shifting which of the Phillips curves and in what direction?


A) by shifting the short-run and long-run Phillips curves left
B) by shifting the short-run and long-run Phillips curves right
C) by shifting only the short-run Phillips curve left
D) by shifting only the short-run Phillips curve right

E) C) and D)
F) A) and D)

Correct Answer

verifed

verified

What did Samuelson and Solow believe about the Phillips curve?


A) It implied that low unemployment was associated with low inflation.
B) It indicated that the aggregate supply and aggregate demand model was incorrect.
C) It illustrated that policymakers face a tradeoff between inflation and unemployment.
D) It demonstrated that fiscal policies were ineffective in reducing unemployment.

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

Correct Answer

verifed

verified

How is the misery index calculated?


A) It is the inflation rate plus the unemployment rate.
B) It is the unemployment rate minus the inflation rate.
C) It is the actual inflation rate plus the expected inflation rate.
D) It is the natural unemployment rate minus the long-run inflation rate.

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

Correct Answer

verifed

verified

Suppose that reducing inflation 3 percentage points would cost a country 15 percent of annual output. What is this country's sacrifice ratio?


A) 3
B) 5
C) 8
D) 12

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

Correct Answer

verifed

verified

Figure 16-3 Figure 16-3 -Refer to the Figure 16-3. When would the economy move from c and 3 to b and 2? A) in the short run if money supply growth increased unexpectedly B) in the short run if money supply growth decreased unexpectedly C) in the long run if money supply growth increased D) in the long run if money supply growth decreased -Refer to the Figure 16-3. When would the economy move from c and 3 to b and 2?


A) in the short run if money supply growth increased unexpectedly
B) in the short run if money supply growth decreased unexpectedly
C) in the long run if money supply growth increased
D) in the long run if money supply growth decreased

E) A) and B)
F) A) and D)

Correct Answer

verifed

verified

Suppose the Bank of Canada reduces the rate of inflation by 4 percentage points. Suppose, as well, that the sacrifice ratio has a value of 2.5. Which of the following describes what happens to GDP?


A) GDP increases by 10 percentage points
B) GDP decreases by 10 percentage points
C) GDP increases by one-quarter of a percentage point
D) GDP decreases by one-quarter of a percentage point

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

Friedman and Phelps believed that the natural rate of unemployment was constant.

A) True
B) False

Correct Answer

verifed

verified

Figure 16-4 Figure 16-4 -Refer to the Figure 16-4. Along SRPC2, what is the expected rate of inflation? A) 0 percent B) 1 percent C) 2 percent D) 3 percent -Refer to the Figure 16-4. Along SRPC2, what is the expected rate of inflation?


A) 0 percent
B) 1 percent
C) 2 percent
D) 3 percent

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

Correct Answer

verifed

verified

Some countries have had high inflation rates for a long time and other countries have had low inflation rates for a long time. Yet in some of the high-inflation countries, the unemployment rate is not much different or even higher than in the low-inflation countries. Explain how these observations can be consistent with the Phillips curve.

Correct Answer

verifed

verified

It is reasonable to guess that in countr...

View Answer

Explain the connection between the vertical long-run aggregate supply curve and the vertical long-run Phillips curve.

Correct Answer

verifed

verified

Both reflect the classical dichotomy. Th...

View Answer

What would NOT be associated with an adverse supply shock?


A) short-run Phillips curve shifts right
B) unemployment rises
C) price level falls
D) output falls

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

Correct Answer

verifed

verified

The Phillips curve and the short-run aggregate-supply curve are closely related, yet one slopes downward and the other slopes upward. Discuss.

Correct Answer

verifed

verified

The Phillips curve shows the relation be...

View Answer

Showing 101 - 120 of 205

Related Exams

Exam 1

Ten Principles of Economics

218 Questions

Exam 2

Thinking Like an Economist

239 Questions

Exam 3

Interdependence and the Gains From Trade

202 Questions

Exam 4

The Market Forces of Supply and Demand

347 Questions

Exam 5

Measuring a Nations Income

169 Questions

Exam 6

Measuring the Cost of Living

173 Questions

Exam 7

Production and Growth

182 Questions

Exam 8

Saving, Investment, and the Financial System

214 Questions

Exam 9

Unemployment and Its Natural Rate

194 Questions

Exam 10

The Monetary System

188 Questions

Exam 11

Money Growth and Inflation

196 Questions

Exam 12

Open-Economy Macroeconomics: Basic Concepts

218 Questions

Exam 13

A Macroeconomic Theory of the Small Open Economy

195 Questions

Exam 14

Aggregate Demand and Aggregate Supply

256 Questions

Exam 15

The Influence of Monetary and Fiscal Policy on Aggregate Demand

223 Questions

Exam 17

Five Debates Over Macroeconomic Policy

111 Questions

Show Answer