Question 1

The Volcker disinflation

Accepted Answer

A)   had virtually no impact on output just as the classical dichotomy suggested.
B)   was associated with rising output,perhaps due to expansionary fiscal policy.
C)   caused output to fall,but by less than the typical estimate of the sacrifice ratio suggested.
D)   None of the above is correct.E) A) and D)
F) A) and C)

Question 2

The consequences of the Volcker disinflation demonstrated that when Volcker announced his intention to reduce inflation quickly,on average the public thought

Accepted Answer

A)   he would try to fool them by raising inflation to decrease unemployment.
B)   inflation would be unchanged.
C)   inflation would fall but not by as much or as quickly as Volcker claimed.
D)   inflation would fall even further than Volcker was willing to admit.E) None of the above
F) A) and B)

Question 3

If policymakers accommodate an adverse supply shock,then in the short run the unemployment rate

Accepted Answer

A)   and the inflation rate rise.
B)   and the inflation rate fall.
C)   rises and the inflation rate falls.
D)   falls and the inflation rate rises.E) A) and B)
F) B) and C)

Question 4

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Accepted Answer

A) True 
 B)False

Question 5

The long-run response to an increase in the growth rate of the money supply is shown by shifting

Accepted Answer

A)   the short-run and long-run Phillips curves left.
B)   the short-run and long-run Phillips curves right.
C)   only the short-run Phillips curve left.
D)   only the short-run Phillips curve right.E) None of the above
F) A) and D)

Question 6

Suppose that a small economy that produces mostly agricultural goods experiences a year with exceptionally good conditions for growing crops.The good weather would

Accepted Answer

A)   shift both the short-run aggregate supply and the short-run Phillips curve right.
B)   shift both the short-run aggregate supply and the short-run Phillips curve left.
C)   shift the short-run aggregate supply curve to the right,and the short-run Phillips curve to the left.
D)   shift the short-run aggregate supply curve to the left,and the short-run Phillips curve to the right.E) All of the above
F) B) and C)

Question 7

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 8

Phillips found a negative relation between

Accepted Answer

A)   output and unemployment.
B)   output and employment.
C)   wage inflation and unemployment.
D)   None of the above is correct.E) None of the above
F) A) and B)

Question 9

Other things the same,a country that decides to reduce inflation will

Accepted Answer

A)   have a higher unemployment rate in the short run and the long run.
B)   have a higher unemployment rate only in the long run.
C)   have a higher unemployment rate only in the short run.
D)   not have a higher unemployment rate in either the short run or the long run.E) All of the above
F) A) and B)

Question 10

In the 1970s,the Fed accommodated a(n)

Accepted Answer

A)   adverse supply shock and so contributed to higher inflation.
B)   adverse supply shock and so contributed to lower inflation.
C)   favorable supply shock and so contributed to higher inflation.
D)   favorable supply shock and so contributed to lower inflation.E) B) and D)
F) All of the above

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Figure 35-2
Use the pair of diagrams below to answer the following questions.  
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,an increase in government expenditures moves the economy to

Accepted Answer

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

Question 13

Fiscal policy cannot be used to move the economy along the short-run Phillips curve.

Accepted Answer

A) True 
 B)False

Question 14

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply,then in the short run the Federal Reserve's action

Accepted Answer

A)   lowers both inflation and unemployment.
B)   lowers inflation but raises unemployment.
C)   raises inflation but lowers unemployment.
D)   raises both inflation and unemployment.E) C) and D)
F) A) and B)

Question 15

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

Question 16

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 17

In the late 1960s,economist Edmund Phelps published a paper that

Accepted Answer

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

Question 18

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.Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2012,and those two points correspond to points B and C,respectively,on the left-hand graph.Then it is apparent that the price index equaled

Accepted Answer

A)   130 in 2011.
B)   115 in 2011.
C)   110 in 2011.
D)   100 in 2011.E) A) and B)
F) All of the above

Question 19

If the government raises government expenditures,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 D)
F) None of the above

Question 20

If efficiency wages became more common,

Accepted Answer

A)   both the long-run Phillips curve and the long-run aggregate supply curve would shift right.
B)   both the long-run Phillips curve and the long-run aggregate supply curve would shift left.
C)   the long-run Phillips curve would shift right,and the long-run aggregate supply curve would shift left.
D)   the long-run Phillips curve would shift left,and the long-run aggregate supply curve would shift right.E) A) and D)
F) B) and C)

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

Correct Answer
verified

Phillips found a negative relation between

Correct Answer
verified

In the 1970s,the Fed accommodated a(n)

Correct Answer
verified

If policymakers accommodate an adverse supply shock,then in the short run the unemployment rate

Correct Answer
verified

Fiscal policy cannot be used to move the economy along the short-run Phillips curve.

Correct Answer
verified

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

Correct Answer
verified

The consequences of the Volcker disinflation demonstrated that when Volcker announced his intention to reduce inflation quickly,on average the public thought

Correct Answer
verified

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply,then in the short run the Federal Reserve's action

Correct Answer
verified

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Correct Answer
verified

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,an increase in government expenditures moves the economy to

Correct Answer
verified

The Volcker disinflation

Correct Answer
verified

The long-run response to an increase in the growth rate of the money supply is shown by shifting

Correct Answer
verified

If the government raises government expenditures,then in the short run prices

Correct Answer
verified

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

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

Suppose that a small economy that produces mostly agricultural goods experiences a year with exceptionally good conditions for growing crops.The good weather would

Correct Answer
verified

In the late 1960s,economist Edmund Phelps published a paper that

Correct Answer
verified

If efficiency wages became more common,

Correct Answer
verified

Other things the same,a country that decides to reduce inflation will

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

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

Correct AnswerverifiedShow Answer

Phillips found a negative relation between

Correct AnswerverifiedShow Answer

In the 1970s,the Fed accommodated a(n)

Correct AnswerverifiedShow Answer

If policymakers accommodate an adverse supply shock,then in the short run the unemployment rate

Correct AnswerverifiedShow Answer

Fiscal policy cannot be used to move the economy along the short-run Phillips curve.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The consequences of the Volcker disinflation demonstrated that when Volcker announced his intention to reduce inflation quickly,on average the public thought

Correct AnswerverifiedShow Answer

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply,then in the short run the Federal Reserve's action

Correct AnswerverifiedShow Answer

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Correct AnswerverifiedShow Answer

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,an increase in government expenditures moves the economy to

Correct AnswerverifiedShow Answer

The Volcker disinflation

Correct AnswerverifiedShow Answer

The long-run response to an increase in the growth rate of the money supply is shown by shifting

Correct AnswerverifiedShow Answer

If the government raises government expenditures,then in the short run prices

Correct AnswerverifiedShow Answer

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

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

Suppose that a small economy that produces mostly agricultural goods experiences a year with exceptionally good conditions for growing crops.The good weather would

Correct AnswerverifiedShow Answer

In the late 1960s,economist Edmund Phelps published a paper that

Correct AnswerverifiedShow Answer

If efficiency wages became more common,

Correct AnswerverifiedShow Answer

Other things the same,a country that decides to reduce inflation will

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

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