Question 1

If there is a temporary adverse supply shock,then the short-run Phillips curve shifts to the

Accepted Answer

A)  right.It remains to the right regardless of monetary policy.
B)  right.It remains to the right if the central bank pursues expansionary monetary policy.
C)  left.It remains to the left regardless of monetary policy.
D)  left.It remains to the left if the central bank pursues expansionary monetary policy.E) A) and D)
F) A) and C)

Question 2

If the Fed wants to reverse the effects of an adverse supply shock on unemployment,it should

Accepted Answer

A)  increase the money supply growth rate which raises the inflation rate.
B)  increase the money supply growth rate which reduces the inflation rate.
C)  decrease the money supply growth rate which raises the inflation rate.
D)  decrease the money supply growth rate which reduces the inflation rate.E) None of the above
F) C) and D)

Question 3

In 1980,the U.S.economy had an inflation rate of

Accepted Answer

A)  about 1 percent and an unemployment rate of about 7 percent.
B)  less than 4 percent and an unemployment rate of less than 6 percent.
C)  less than 7 percent and an unemployment rate of about 9 percent.
D)  more than 9 percent and an unemployment rate of about 7 percent.E) A) and B)
F) A) and C)

Question 4

A favorable supply shock will shift short-run aggregate supply

Accepted Answer

A)  left,making output rise.
B)  left,making output fall.
C)  right,making output rise.
D)  right,making output fall.E) None of the above
F) C) and D)

Question 5

After an oil price shock,which of the following would move unemployment back towards its natural rate?

Accepted Answer

A)  the Fed sells bonds
B)  the government raises taxes
C)  the government increases expenditures
D)  All of the above are correct.E) None of the above
F) A) and B)

Question 6

An adverse supply shock will shift short-run aggregate supply

Accepted Answer

A)  right,making prices rise.
B)  left,making prices rise.
C)  right,making prices fall.
D)  left,making prices fall.E) A) and B)
F) A) and C)

Question 7

An event that directly affects firms' costs of production and thus the prices they charge is called

Accepted Answer

A)  a Phillips contraction.
B)  an inflationary spiral.
C)  a demand shock.
D)  a supply shock.E) A) and C)
F) A) and B)

Question 8

Which of the following results in higher inflation and higher unemployment in the short run?

Accepted Answer

A)  a more expansionary monetary policy
B)  a more contractionary monetary policy
C)  a decrease in the minimum wage
D)  an adverse supply shock such as an increase in the price of oilE) A) and B)
F) A) and D)

Question 9

A favorable supply shock

Accepted Answer

A)  raises unemployment and the inflation rate.
B)  raises unemployment and reduces the inflation rate.
C)  reduces unemployment and raises the inflation rate.
D)  reduces unemployment and the inflation rate.E) A) and B)
F) A) and C)

Question 10

Figure 35-9.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 AS2,but it could not explain the shift of the Phillips curve from PC1 to PC2. B) the shift of the Phillips curve from PC1 to PC2,but it could not explain the shift of the aggregate-supply curve from AS1 to AS2. C) both the shift of the aggregate-supply curve from AS1 to AS2 and the shift of the Phillips curve from PC1 to PC2. D) neither the shift of the aggregate-supply curve from AS1 to AS2 nor the shift of the Phillips curve from PC1 to PC2." class="answers-bank-image d-inline" rel="preload" > 1 to AS2,but it could not explain the shift of the Phillips curve from PC1 to PC2. B) the shift of the Phillips curve from PC1 to PC2,but it could not explain the shift of the aggregate-supply curve from AS1 to AS2. C) both the shift of the aggregate-supply curve from AS1 to AS2 and the shift of the Phillips curve from PC1 to PC2. D) neither the shift of the aggregate-supply curve from AS1 to AS2 nor the shift of the Phillips curve from PC1 to PC2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 35-9.A significant increase in the world price of oil could explain

Accepted Answer

A)  the shift of the aggregate-supply curve from AS1 to AS2,but it could not explain the shift of the Phillips curve from PC1 to PC2.
B)  the shift of the Phillips curve from PC1 to PC2,but it could not explain the shift of the aggregate-supply curve from AS1 to AS2.
C)  both the shift of the aggregate-supply curve from AS1 to AS2 and the shift of the Phillips curve from PC1 to PC2.
D)  neither the shift of the aggregate-supply curve from AS1 to AS2 nor the shift of the Phillips curve from PC1 to PC2.E) A) and B)
F) A) and C)

Question 11

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) None of the above
F) All of the above

Question 12

Figure 35-9.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 AS2 A) results in a more favorable trade-off between inflation and unemployment. B) results in a more favorable trade-off between inflation and the growth rate of real GDP. C) represents an adverse shock to aggregate supply. D) represents a favorable shock to aggregate supply." class="answers-bank-image d-inline" rel="preload" > 1 to AS2 A) results in a more favorable trade-off between inflation and unemployment. B) results in a more favorable trade-off between inflation and the growth rate of real GDP. C) represents an adverse shock to aggregate supply. D) represents a favorable shock to aggregate supply." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 35-9.The shift of the aggregate-supply curve from AS1 to AS2

Accepted Answer

A)  results in a more favorable trade-off between inflation and unemployment.
B)  results in a more favorable trade-off between inflation and the growth rate of real GDP.
C)  represents an adverse shock to aggregate supply.
D)  represents a favorable shock to aggregate supply.E) A) and D)
F) A) and C)

Question 13

Figure 35-9.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,the curve will soon shift back to PC1 if people perceive the A) increase in the inflation rate as a temporary aberration. B) economic boom as a temporary aberration. C) increase in the inflation rate as a sign of a new era of higher inflation. D) economic boom as a sign of a new era of higher economic growth." class="answers-bank-image d-inline" rel="preload" > 1 to PC2,the curve will soon shift back to PC1 if people perceive the A) increase in the inflation rate as a temporary aberration. B) economic boom as a temporary aberration. C) increase in the inflation rate as a sign of a new era of higher inflation. D) economic boom as a sign of a new era of higher economic growth." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 35-9.Subsequent to the shift of the Phillips curve from PC1 to PC2,the curve will soon shift back to PC1 if people perceive the

Accepted Answer

A)  increase in the inflation rate as a temporary aberration.
B)  economic boom as a temporary aberration.
C)  increase in the inflation rate as a sign of a new era of higher inflation.
D)  economic boom as a sign of a new era of higher economic growth.E) None of the above
F) B) and D)

Question 14

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

Question 15

A favorable supply shock will cause the price level

Accepted Answer

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

Question 16

Suppose OPEC is unable to come to an agreement regarding oil production and as a result the price of oil drops.Which of the following would you expect to occur as a result of this favorable supply shock?

Accepted Answer

A)  The short-run Phillips curve will shift to the right and the unemployment rate will increase.
B)  The short-run Phillips curve will shift to the right and the unemployment rate will decrease.
C)  The short-run Phillips curve will shift to the left and the unemployment rate will increase.
D)  The short-run Phillips curve will shift to the left and the unemployment rate will decrease.E) A) and B)
F) B) and C)

Question 17

In 1980,the combination of inflation and unemployment the U.S.was experiencing

Accepted Answer

A)  resulted from a leftward shift of the short-run Phillips curve.
B)  was consistent with feasible inflation-unemployment combinations provided by the Phillips curve of the 1960s.
C)  followed two supply shocks that were triggered by the Organization of Petroleum Exporting Countries.
D)  All of the above are correct.E) B) and D)
F) A) and B)

Question 18

Which of the following shifts aggregate supply to the right?

Accepted Answer

A)  a decline in the price of imported natural resources
B)  a technological advance
C)  an older labor force that leaves jobs less frequently
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 19

In which case,if any,will inflation remain higher after a temporary adverse supply shock?

Accepted Answer

A)  both when the central bank maintains a higher money supply growth rate and when the central bank does nothing
B)  only if the central bank does nothing
C)  only if the central bank maintains a higher money supply growth rate
D)  None of the above is correct.Whether the central bank maintains a higher money supply growth rate or not,the inflation rate will return to its original level.E) B) and D)
F) A) and B)

Question 20

Which of the following is an example of an adverse supply shock?

Accepted Answer

A)  a decrease in the money supply
B)  a tax cut
C)  a worldwide drought
D)  decreased government spendingE) A) and D)
F) A) and C)

Exam 22: The Short Run Trade Off Between Inflation and Unemployment: Shifts in the Phillips Curve the Role of Supply Shocks

A favorable supply shock will shift short-run aggregate supply

Correct Answer
verified

A favorable supply shock

Correct Answer
verified

In 1980,the U.S.economy had an inflation rate of

Correct Answer
verified

An adverse supply shock will shift short-run aggregate supply

Correct Answer
verified

Which of the following is an example of an adverse supply shock?

Correct Answer
verified

Figure 35-9.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 35-9.The shift of the aggregate-supply curve from AS₁ to AS₂

Correct Answer
verified

Suppose OPEC is unable to come to an agreement regarding oil production and as a result the price of oil drops.Which of the following would you expect to occur as a result of this favorable supply shock?

Correct Answer
verified

After an oil price shock,which of the following would move unemployment back towards its natural rate?

Correct Answer
verified

A favorable supply shock will cause the price level

Correct Answer
verified

In which case,if any,will inflation remain higher after a temporary adverse supply shock?

Correct Answer
verified

If there is a temporary adverse supply shock,then the short-run Phillips curve shifts to the

Correct Answer
verified

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

Correct Answer
verified

Figure 35-9.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 35-9.A significant increase in the world price of oil could explain

Correct Answer
verified

An increase in the price of oil shifts the

Correct Answer
verified

If the Fed wants to reverse the effects of an adverse supply shock on unemployment,it should

Correct Answer
verified

Which of the following results in higher inflation and higher unemployment in the short run?

Correct Answer
verified

Correct Answer
verified

In 1980,the combination of inflation and unemployment the U.S.was experiencing

Correct Answer
verified

An event that directly affects firms' costs of production and thus the prices they charge is called

Correct Answer
verified

Which of the following shifts aggregate supply to the right?

Correct Answer
verified

Exam 22: The Short Run Trade Off Between Inflation and Unemployment: Shifts in the Phillips Curve the Role of Supply Shocks

A favorable supply shock will shift short-run aggregate supply

Correct AnswerverifiedShow Answer

A favorable supply shock

Correct AnswerverifiedShow Answer

In 1980,the U.S.economy had an inflation rate of

Correct AnswerverifiedShow Answer

An adverse supply shock will shift short-run aggregate supply

Correct AnswerverifiedShow Answer

Which of the following is an example of an adverse supply shock?

Correct AnswerverifiedShow Answer

Figure 35-9.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 35-9.The shift of the aggregate-supply curve from AS1 to AS2

Correct AnswerverifiedShow Answer

Suppose OPEC is unable to come to an agreement regarding oil production and as a result the price of oil drops.Which of the following would you expect to occur as a result of this favorable supply shock?

Correct AnswerverifiedShow Answer

After an oil price shock,which of the following would move unemployment back towards its natural rate?

Correct AnswerverifiedShow Answer

A favorable supply shock will cause the price level

Correct AnswerverifiedShow Answer

In which case,if any,will inflation remain higher after a temporary adverse supply shock?

Correct AnswerverifiedShow Answer

If there is a temporary adverse supply shock,then the short-run Phillips curve shifts to the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 35-9.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 35-9.A significant increase in the world price of oil could explain

Correct AnswerverifiedShow Answer

An increase in the price of oil shifts the

Correct AnswerverifiedShow Answer

If the Fed wants to reverse the effects of an adverse supply shock on unemployment,it should

Correct AnswerverifiedShow Answer

Which of the following results in higher inflation and higher unemployment in the short run?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In 1980,the combination of inflation and unemployment the U.S.was experiencing

Correct AnswerverifiedShow Answer

An event that directly affects firms' costs of production and thus the prices they charge is called

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate supply to the right?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 35-9.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 35-9.The shift of the aggregate-supply curve from AS₁ to AS₂

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified