Question 1

Which of the following is downward-sloping?

Accepted Answer

A)   both the long-run Phillips curve and the long-run aggregate-supply curve
B)   neither the long-run Phillips curve nor the long-run aggregate-supply curve
C)   the long-run Phillips curve, but not the long-run aggregate-supply curve
D)   the short-run Phillips curve, but not the long-run aggregate-supply curveE) A) and C)
F) None of the above

Question 2

In the long run an increase in the money supply growth rate affects

Accepted Answer

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

Question 3

The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy.
-Refer to The Economy in 2008. The short-run effects of rising world commodity prices are shown by

Accepted Answer

A)   moving to the right along the short-run Phillips curve.
B)   moving to the left along the short-run Phillips curve.
C)   shifting the short-run Phillips curve right.
D)   shifting the short-run Phillips curve left.E) A) and C)
F) B) and D)

Question 4

Suppose that a central bank reduces the money supply growth rate to disinflate. What does disinflation mean? If people do not alter their inflation expectations, what happens to output and unemployment?

Accepted Answer

Disinflation means a reduction...

Question 5

Any policy change that reduced the natural rate of unemployment

Accepted Answer

A)   would shift the long-run Phillips curve to the right.
B)   would shift the long-run aggregate-supply curve to the right.
C)   would be a policy change that impeded the functioning of the labor market.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 6

A.W. Phillips found a

Accepted Answer

A)   positive relation between unemployment and inflation in the United Kingdom.
B)   positive relation between unemployment and inflation in the United States.
C)   negative relation between unemployment and inflation in the United States.
D)   negative relation between unemployment and inflation in the United Kingdom.E) B) and D)
F) None of the above

Question 7

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Accepted Answer

A)   The short-run Phillips curve would shift to the left.
B)   The short-run Phillips curve would shift to the right.
C)   The economy would move up and to the left along a given short-run Phillips curve.
D)   The economy would move down and to the right along a given short-run Phillips curve.E) C) and D)
F) A) and C)

Question 8

Figure 35-3. The left-hand graph shows a short-run aggregate-supply SRAS)  curve and two aggregate-demand AD)  curves. On the left-hand diagram, Y represents output and on the right-hand diagram, U represents the unemployment rate.  
-Refer to Figure 35-3. What is measured along the vertical axis of the right-hand graph?

Accepted Answer

A)   the interest rate
B)   the inflation rate
C)   the government's budget deficit as a percent of GDP
D)   the growth rate of the nominal money supplyE) C) and D)
F) B) and D)

Question 9

If the Federal Reserve increases the growth rate of the money supply, in the long run

Accepted Answer

A)   inflation is higher and the unemployment rate is lower.
B)   inflation is higher while the unemployment rate is unchanged.
C)   inflation is unchanged while the unemployment rate is lower.
D)   None of the above is correct.E) C) and D)
F) B) and D)

Question 10

Over the long run the Volcker disinflation

Accepted Answer

A)   shifted the short-run and long-run Phillips curves left.
B)   shifted the short-run, but not the long-run Phillips curve left.
C)   shifted the long-run, but not the short-run Phillips curve left.
D)   None of the above is correct.E) None of the above
F) A) and D)

Question 11

Other things the same, a decrease in aggregate demand decreases both inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 12

Figure 35-7
Use the two graphs in the diagram to answer the following questions.
  
-Refer to Figure 35-7. Starting from C and 3, in the short run, an unexpected decrease in money supply growth moves the economy to

Accepted Answer

A)   A and 1.
B)   B and 2.
C)   back to C and 3.
D)   D and 4.E) B) and C)
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 the government reduced the minimum wage and pursued expansionary monetary policy, then in the long run

Accepted Answer

A)   both the unemployment rate and the inflation rate would be higher.
B)   both the unemployment rate and the inflation rate would be lower.
C)   the unemployment rate would be higher and the inflation rate would be lower.
D)   the unemployment rate would be lower and the inflation rate would be higher.E) B) and D)
F) A) and C)

Question 15

One determinant of the long-run average unemployment rate is the

Accepted Answer

A)   market power of unions, while the inflation rate depends primarily upon government spending.
B)   minimum wage, while the inflation rate depends primarily upon the money supply growth rate.
C)   rate of growth of the money supply, while the inflation rate depends primarily upon the market power of unions.
D)   existence of efficiency wages, while the inflation rate depends primarily upon the extent to which firms are competitive.E) All of the above
F) C) and D)

Question 16

In the 1970's the Federal Reserve responded to an adverse supply shock. Its policy made

Accepted Answer

A)   the recession that followed smaller and so provided a more favorable tradeoff between inflation and unemployment.
B)   the recession that followed smaller, but in doing so produced a less favorable tradeoff between inflation and unemployment.
C)   the recession that followed larger, but in doing so provided a more favorable tradeoff between inflation and unemployment.
D)   the recession that followed larger and also produced a less favorable tradeoff between inflation and unemployment.E) A) and B)
F) None of the above

Question 17

Consider two countries: Eastland and Westland. Eastland's long­run Phillips curve sits further to the right than does Westland's long­run Phillips curve. Eastland and Westland are identical in all other ways. In particular, they have the same money supply growth rates. In the long run, compared to Westland, which of the following will we observe in Eastland?

Accepted Answer

A)   higher unemployment and higher inflation.
B)   higher unemployment and the same rate of inflation.
C)   lower unemployment and higher inflation.
D)   None of the above is correct.E) All of the above
F) A) and B)

Question 18

Figure 35-7
Use the two graphs in the diagram to answer the following questions.
  
-Refer to Figure 35-7. Starting from C and 3, in the long run, an increase in money supply growth moves the economy to

Accepted Answer

A)   A and 1.
B)   back to C and 3.
C)   D and 4.
D)   F and 5.E) A) and B)
F) A) and C)

Question 19

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

Accepted Answer

A)   Inflation expectations rise which shifts the short-run Phillips curve to the right.
B)   Inflation expectations rise which shifts the short-run Phillips curve to the left.
C)   Inflation expectations fall which shifts the short-run Phillips curve to the right.
D)   Inflation expectations fall which shifts the short-run Phillips curve to the left.E) A) and B)
F) A) and C)

Question 20

By about 1973, U.S. policymakers had learned that

Accepted Answer

A)   there is no trade-off between inflation and unemployment in the short run.
B)   there is no trade-off between inflation and unemployment in the long run.
C)   Friedman's analysis of inflation and unemployment had been correct, and Phelps's analysis of inflation and unemployment had been incorrect.
D)   Phelps's analysis of inflation and unemployment had been correct, and Friedman's analysis of inflation and unemployment had been incorrect.E) A) and D)
F) All of the above

Exam 17: The Short-Run Tradeoff Between Inflation and Unemployment

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7. Starting from C and 3, in the short run, an unexpected decrease in money supply growth moves the economy to

Correct Answer
verified

If the Federal Reserve increases the growth rate of the money supply, in the long run

Correct Answer
verified

A.W. Phillips found a

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Correct Answer
verified

Which of the following is downward-sloping?

Correct Answer
verified

Over the long run the Volcker disinflation

Correct Answer
verified

In the 1970's the Federal Reserve responded to an adverse supply shock. Its policy made

Correct Answer
verified

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

Correct Answer
verified

Any policy change that reduced the natural rate of unemployment

Correct Answer
verified

By about 1973, U.S. policymakers had learned that

Correct Answer
verified

In the long run an increase in the money supply growth rate affects

Correct Answer
verified

Correct Answer
verified

Suppose that a central bank reduces the money supply growth rate to disinflate. What does disinflation mean? If people do not alter their inflation expectations, what happens to output and unemployment?

Correct Answer
verified
Disinflation means a reduction...
View Answer

Other things the same, a decrease in aggregate demand decreases both inflation and unemployment.

Correct Answer
verified

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

Correct Answer
verified

The Economy in 2008 In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy. -Refer to The Economy in 2008. The short-run effects of rising world commodity prices are shown by

Correct Answer
verified

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7. Starting from C and 3, in the long run, an increase in money supply growth moves the economy to

Correct Answer
verified

One determinant of the long-run average unemployment rate is the

Correct Answer
verified

Exam 17: The Short-Run Tradeoff Between Inflation and Unemployment

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7. Starting from C and 3, in the short run, an unexpected decrease in money supply growth moves the economy to

Correct AnswerverifiedShow Answer

If the Federal Reserve increases the growth rate of the money supply, in the long run

Correct AnswerverifiedShow Answer

A.W. Phillips found a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Correct AnswerverifiedShow Answer

Which of the following is downward-sloping?

Correct AnswerverifiedShow Answer

Over the long run the Volcker disinflation

Correct AnswerverifiedShow Answer

In the 1970's the Federal Reserve responded to an adverse supply shock. Its policy made

Correct AnswerverifiedShow Answer

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

Correct AnswerverifiedShow Answer

Any policy change that reduced the natural rate of unemployment

Correct AnswerverifiedShow Answer

By about 1973, U.S. policymakers had learned that

Correct AnswerverifiedShow Answer

In the long run an increase in the money supply growth rate affects

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a central bank reduces the money supply growth rate to disinflate. What does disinflation mean? If people do not alter their inflation expectations, what happens to output and unemployment?

Correct AnswerverifiedDisinflation means a reduction...View AnswerShow Answer

Other things the same, a decrease in aggregate demand decreases both inflation and unemployment.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Economy in 2008 In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy. -Refer to The Economy in 2008. The short-run effects of rising world commodity prices are shown by

Correct AnswerverifiedShow Answer

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7. Starting from C and 3, in the long run, an increase in money supply growth moves the economy to

Correct AnswerverifiedShow Answer

One determinant of the long-run average unemployment rate is the

Correct AnswerverifiedShow Answer

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Correct Answer
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Disinflation means a reduction...
View Answer

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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