Question 1

In his famous article published in an economics journal in 1958, A.W. Phillips

Accepted Answer

A)   used data for the United States to show a negative relationship between the rate of change of the U.S. consumer price index and the U.S. unemployment rate.
B)   used data for the United States to show a negative relationship between the rate of change of wages in the U.S. and the U.S. unemployment rate.
C)   used data for the United Kingdom to show a negative relationship between the rate of change of the U.K. consumer price index and the U.K. unemployment rate.
D)   used data for the United Kingdom to show a negative relationship between the rate of change of wages in the U.K. and the U.K. unemployment rate.E) None of the above
F) All of the above

Question 2

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

Question 3

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) All of the above
F) None of the above

Question 4

If policymakers increase aggregate demand, then in the short run the price level

Accepted Answer

A)   falls and unemployment rises.
B)   and unemployment fall.
C)   and unemployment rise.
D)   rises and unemployment falls.E) None of the above
F) B) and C)

Question 5

Suppose, as in the 1970's in the U.S., that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force. Would this have any effect on the long-run Phillips curve?

Accepted Answer

Since this would raise the nat...

Question 6

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. Assume the figure charts possible outcomes for the year 2018. In 2018, the economy is at point B on the left-hand graph, which corresponds to point B on the right-hand graph. Also, point A on the left-hand graph corresponds to A on the right-hand graph. The price level in the year 2018 is

Accepted Answer

A)   155.56.
B)   159.00.
C)   163.50.
D)   170.04.E) A) and D)
F) A) and C)

Question 7

Just as the aggregate-supply curve slopes upward only in the short run, the trade-off between inflation and unemployment holds only in the short run.

Accepted Answer

A) True 
 B)False

Question 8

The large increase in oil prices in the 1970s was caused primarily by an)

Accepted Answer

A)   increase in demand for oil.
B)   decrease in demand for oil.
C)   decrease in the supply of oil.
D)   increase in the supply of oil.E) B) and C)
F) C) and D)

Question 9

Disinflation is defined as a

Accepted Answer

A)   zero rate of inflation.
B)   constant rate of inflation.
C)   reduction in the rate of inflation.
D)   negative rate of inflation.E) B) and C)
F) A) and B)

Question 10

The restrictive monetary policy followed by the Fed in the early 1980s

Accepted Answer

A)   reduced both unemployment and inflation.
B)   reduced inflation significantly, but at the cost of a severe recession.
C)   reduced unemployment significantly, but at the cost of higher inflation.
D)   raised both unemployment and inflation.E) All of the above
F) B) and C)

Question 11

A basis for the slope of the short-run Phillips curve is that when unemployment is high there are

Accepted Answer

A)   downward pressures on prices and wages.
B)   downward pressures on prices and upward pressures on wages.
C)   upward pressures on prices and downward pressures on wages.
D)   upward pressures on prices and wages.E) None of the above
F) All of the above

Question 12

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

Accepted Answer

A)   falls, so there are upward pressures on wages and prices.
B)   falls, so there are downward pressures on wages and prices.
C)   rises, so there are upward pressures on wages and prices.
D)   rises, so there are downward pressures on wages and prices.E) None of the above
F) A) and B)

Question 13

Samuelson and Solow reasoned that when aggregate demand was high, unemployment was

Accepted Answer

A)   low, so there was upward pressure on wages and prices.
B)   low, so there was downward pressure on wages and prices.
C)   high, so there was upward pressure on wages and prices.
D)   high, so there was downward pressure on wages and prices.E) A) and C)
F) A) and B)

Question 14

A politician blames the Federal Reserve for being "soft on unemployment" and claims that a permanently higher money supply growth rate will lead to a permanent reduction in the unemployment rate. The politician's argument is

Accepted Answer

A)   consistent with the long-run Phillips curve. Further, the long-run Phillips curve implies that such a policy would not increase inflation.
B)   consistent with the long-run Phillips curve. However, the long-run Phillips curve implies that such a policy would increase inflation.
C)   inconsistent with the long-run Phillips curve. However, the long-run Phillips curve implies that such a policy would not increase inflation.
D)   inconsistent with the long-run Phillips curve. Further, the long-run Phillips curve implies that such a policy would increase inflation.E) A) and D)
F) All of the above

Question 15

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, a decrease in the money supply moves the economy to

Accepted Answer

A)   E and 1.
B)   D and 2.
C)   D and 3.
D)   None of the above is correct.E) All of the above
F) A) and D)

Question 16

Refer to Monetary Policy in Mokania. The Bank of Mokania publicizes that it intends to reduce the inflation rate to 5%. If it actually reduces inflation to 3% and people were expecting inflation to fall only to 8%, then

Accepted Answer

A)   unemployment falls but it would have fallen by more if the Bank of Mokania had reduced inflation to 5% rather than 3%.
B)   unemployment falls but it would have fallen by less if the Bank of Mokania had reduced inflation to 5% rather than 3%.
C)   unemployment rises but it would have risen by more if the Bank of Mokania had reduced inflation to 5% rather than 3%.
D)   unemployment rises but it would have risen by less if the Bank of Mokania had reduced inflation to 5% rather than 3%.E) All of the above
F) B) and C)

Question 17

U.S. monetary policy in the early 1980s reduced the inflation rate by more than half.

Accepted Answer

A) True 
 B)False

Question 18

To say that the natural rate of unemployment changes over time is to say that

Accepted Answer

A)   the short-run Phillips curve shifts over time.
B)   the long-run Phillips curve shifts over time.
C)   the aggregate demand curve shifts over time.
D)   the Federal Reserve influences the natural rate of unemployment over time.E) B) and C)
F) A) and B)

Question 19

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Accepted Answer

A)   Mark gets an increase in his nominal wage.
B)   Bob gets more job offers.
C)   Susan reduces prices at her pizza restaurant.
D)   Tom reads that the central bank recently raised the money supplyE) A) and B)
F) A) and C)

Question 20

If the sacrifice ratio is 4, then reducing the inflation rate from 9 percent to 5 percent would require sacrificing

Accepted Answer

A)   4 percent of annual output.
B)   8 percent of annual output.
C)   12 percent of annual output.
D)   16 percent of annual output.E) C) and D)
F) A) and B)

Exam 22: The Short-Run Trade-Off Between Inflation and Unemployment

The large increase in oil prices in the 1970s was caused primarily by an)

Correct Answer
verified

Suppose, as in the 1970's in the U.S., that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force. Would this have any effect on the long-run Phillips curve?

Correct Answer
verified
Since this would raise the nat...
View Answer

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

Correct Answer
verified

U.S. monetary policy in the early 1980s reduced the inflation rate by more than half.

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, a decrease in the money supply moves the economy to

Correct Answer
verified

Just as the aggregate-supply curve slopes upward only in the short run, the trade-off between inflation and unemployment holds only in the short run.

Correct Answer
verified

If the sacrifice ratio is 4, then reducing the inflation rate from 9 percent to 5 percent would require sacrificing

Correct Answer
verified

A politician blames the Federal Reserve for being "soft on unemployment" and claims that a permanently higher money supply growth rate will lead to a permanent reduction in the unemployment rate. The politician's argument is

Correct Answer
verified

A basis for the slope of the short-run Phillips curve is that when unemployment is high there are

Correct Answer
verified

Correct Answer
verified

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Correct Answer
verified

Samuelson and Solow reasoned that when aggregate demand was high, unemployment was

Correct Answer
verified

Refer to Monetary Policy in Mokania. The Bank of Mokania publicizes that it intends to reduce the inflation rate to 5%. If it actually reduces inflation to 3% and people were expecting inflation to fall only to 8%, then

Correct Answer
verified

If policymakers increase aggregate demand, then in the short run the price level

Correct Answer
verified

Over the long run the Volcker disinflation

Correct Answer
verified

Disinflation is defined as a

Correct Answer
verified

In his famous article published in an economics journal in 1958, A.W. Phillips

Correct Answer
verified

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

Correct Answer
verified

To say that the natural rate of unemployment changes over time is to say that

Correct Answer
verified

The restrictive monetary policy followed by the Fed in the early 1980s

Correct Answer
verified

Exam 22: The Short-Run Trade-Off Between Inflation and Unemployment

The large increase in oil prices in the 1970s was caused primarily by an)

Correct AnswerverifiedShow Answer

Suppose, as in the 1970's in the U.S., that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force. Would this have any effect on the long-run Phillips curve?

Correct AnswerverifiedSince this would raise the nat...View AnswerShow Answer

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

Correct AnswerverifiedShow Answer

U.S. monetary policy in the early 1980s reduced the inflation rate by more than half.

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, a decrease in the money supply moves the economy to

Correct AnswerverifiedShow Answer

Just as the aggregate-supply curve slopes upward only in the short run, the trade-off between inflation and unemployment holds only in the short run.

Correct AnswerverifiedShow Answer

If the sacrifice ratio is 4, then reducing the inflation rate from 9 percent to 5 percent would require sacrificing

Correct AnswerverifiedShow Answer

A politician blames the Federal Reserve for being "soft on unemployment" and claims that a permanently higher money supply growth rate will lead to a permanent reduction in the unemployment rate. The politician's argument is

Correct AnswerverifiedShow Answer

A basis for the slope of the short-run Phillips curve is that when unemployment is high there are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Correct AnswerverifiedShow Answer

Samuelson and Solow reasoned that when aggregate demand was high, unemployment was

Correct AnswerverifiedShow Answer

Refer to Monetary Policy in Mokania. The Bank of Mokania publicizes that it intends to reduce the inflation rate to 5%. If it actually reduces inflation to 3% and people were expecting inflation to fall only to 8%, then

Correct AnswerverifiedShow Answer

If policymakers increase aggregate demand, then in the short run the price level

Correct AnswerverifiedShow Answer

Over the long run the Volcker disinflation

Correct AnswerverifiedShow Answer

Disinflation is defined as a

Correct AnswerverifiedShow Answer

In his famous article published in an economics journal in 1958, A.W. Phillips

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

To say that the natural rate of unemployment changes over time is to say that

Correct AnswerverifiedShow Answer

The restrictive monetary policy followed by the Fed in the early 1980s

Correct AnswerverifiedShow Answer

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Since this would raise the nat...
View Answer

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