Question 1

The natural rate of unemployment

Accepted Answer

A)   is constant over time.
B)   varies over time,but can't be changed by the government.
C)   is the unemployment rate that the economy tends to move to in the long run.
D)   depends on the rate at which the Fed increases the money supply.E) A) and C)
F) All of the above

Question 2

In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?

Accepted Answer

In the long run the natural rate of unem...

Question 3

Figure 22-1.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 22-1.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.Also suppose we know that the price index equaled 120 in 2011.Then the numbers 115 and 130 on the vertical axis of the left-hand graph would have to be replaced by

Accepted Answer

A)   155 and 175,respectively.
B)   138 and 156,respectively.
C)   137.5 and 154.75,respectively.
D)   135 and 150,respectively.E) A) and C)
F) A) and B)

Question 4

Suppose the Fed decreased the growth rate of the money supply.Which of the following would be lower in the long run?

Accepted Answer

A)   both the natural rate of unemployment and the inflation rate
B)   the natural rate of unemployment,but not the inflation rate
C)   the inflation rate,but not the natural rate of unemployment
D)   neither the natural unemployment rate nor the inflation rateE) A) and C)
F) All of the above

Question 5

Figure 22-7
Use this graph to answer the questions below. 
-Refer to figure 22-7.If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy,in the short run the economy moves to

Accepted Answer

A)   3% unemployment and 5% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
B)   3% unemployment and 5% inflation.In the long run the economy moves to 5% unemployment and 3% inflation.
C)   7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
D)   7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 3% inflation.E) A) and B)
F) A) and C)

Question 6

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Considering a plot of the inflation rate and the unemployment rate,one might conjecture that the short run Phillips curve was further to the right in the first part of the 2000's than it was in the last part of the 1990s and 2000.

Accepted Answer

A)   If so,this might have been the result of a negative supply shock or an increase in expected inflation.
B)   If so,this might been the result of a negative supply shock,or a decrease in expected inflation.
C)   If so,this might have been the result of a positive supply shock,or an increase in expected inflation.
D)   If so,this might have been the result of a positive supply shock,or a decrease in expected inflation.E) A) and B)
F) All of the above

Question 9

Which of the following depends primarily on the growth rate of the money supply?

Accepted Answer

A)   inflation and the natural rate of unemployment
B)   inflation but not the natural rate of unemployment
C)   the natural rate of unemployment but not inflation
D)   neither inflation nor the natural rate of unemploymentE) A) and B)
F) All of the above

Question 10

An adverse supply shock causes inflation to

Accepted Answer

A)   rise and the short-run Phillips curve to shift right.
B)   rise and the short-run Phillips curve to shift left.
C)   fall and the short-run Phillips curve to shift right.
D)   fall and the short-run Phillips curve to shift left.E) All of the above
F) None of the above

Question 11

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Accepted Answer

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

Question 12

According to Friedman and Phelps's analysis of the Phillips curve,

Accepted Answer

A)   the unemployment rate will be below its natural rate whenever inflation is negative.
B)   the unemployment rate will be below its natural rate whenever inflation is positive.
C)   the unemployment rate will be below its natural rate only if inflation is less than expected.
D)   the unemployment rate will be below its natural rate only if inflation is greater than expected.E) None of the above
F) A) and C)

Question 13

An increase in expected inflation shifts the

Accepted Answer

A)   short-run Phillips curve right.
B)   short-run Phillips curve left.
C)   long-run Phillips curve right.
D)   long-run Phillips curve left.E) B) and C)
F) A) and B)

Question 14

If the long-run Phillips curve shifts to the left,then for any given rate of money growth and inflation the economy has

Accepted Answer

A)   higher unemployment and lower output.
B)   higher unemployment and higher output.
C)   lower unemployment and lower output.
D)   lower unemployment and higher output.E) A) and B)
F) B) and C)

Question 15

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 16

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

Accepted Answer

The Phillips curve shows the relation be...

Question 17

If the central bank increases 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) B) and C)
F) A) and D)

Question 18

On a given short-run Phillips curve which of the following is held constant?

Accepted Answer

A)   the level of GDP
B)   the unemployment rate
C)   expected inflation
D)   employmentE) A) and C)
F) A) and B)

Question 19

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Accepted Answer

A) True 
 B)False

Question 20

In the equation, Unemployment rate = Natural rate of unemployment - a *(ctual inflation - Expected inflation) ,
The variable a is a parameter that measures how much

Accepted Answer

A)   actual inflation responds to expected inflation.
B)   expected inflation responds to actual inflation.
C)   the natural rate of unemployment responds to unexpected inflation.
D)   actual unemployment responds to unexpected inflation.E) B) and C)
F) None of the above

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

According to Friedman and Phelps's analysis of the Phillips curve,

Correct Answer
verified

Which of the following depends primarily on the growth rate of the money supply?

Correct Answer
verified

An increase in expected inflation shifts the

Correct Answer
verified

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Correct Answer
verified

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

Correct Answer
verified

If the long-run Phillips curve shifts to the left,then for any given rate of money growth and inflation the economy has

Correct Answer
verified

Considering a plot of the inflation rate and the unemployment rate,one might conjecture that the short run Phillips curve was further to the right in the first part of the 2000's than it was in the last part of the 1990s and 2000.

Correct Answer
verified

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

Correct Answer
verified

An adverse supply shock causes inflation to

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

In the equation, Unemployment rate = Natural rate of unemployment - a *(ctual inflation - Expected inflation) , The variable a is a parameter that measures how much

Correct Answer
verified

In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?

Correct Answer
verified
In the long run the natural rate of unem...
View 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 Answer
verified

Figure 22-7 Use this graph to answer the questions below. -Refer to figure 22-7.If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy,in the short run the economy moves to

Correct Answer
verified

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Correct Answer
verified

Suppose the Fed decreased the growth rate of the money supply.Which of the following would be lower in the long run?

Correct Answer
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
verified
The Phillips curve shows the relation be...
View Answer

On a given short-run Phillips curve which of the following is held constant?

Correct Answer
verified

The natural rate of unemployment

Correct Answer
verified

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

According to Friedman and Phelps's analysis of the Phillips curve,

Correct AnswerverifiedShow Answer

Which of the following depends primarily on the growth rate of the money supply?

Correct AnswerverifiedShow Answer

An increase in expected inflation shifts the

Correct AnswerverifiedShow Answer

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the long-run Phillips curve shifts to the left,then for any given rate of money growth and inflation the economy has

Correct AnswerverifiedShow Answer

Considering a plot of the inflation rate and the unemployment rate,one might conjecture that the short run Phillips curve was further to the right in the first part of the 2000's than it was in the last part of the 1990s and 2000.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An adverse supply shock causes inflation to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the equation, Unemployment rate = Natural rate of unemployment - a *(ctual inflation - Expected inflation) , The variable a is a parameter that measures how much

Correct AnswerverifiedShow Answer

In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?

Correct AnswerverifiedIn the long run the natural rate of unem...View AnswerShow 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

Figure 22-7 Use this graph to answer the questions below. -Refer to figure 22-7.If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy,in the short run the economy moves to

Correct AnswerverifiedShow Answer

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

Correct AnswerverifiedShow Answer

Suppose the Fed decreased the growth rate of the money supply.Which of the following would be lower in the long run?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe Phillips curve shows the relation be...View AnswerShow Answer

On a given short-run Phillips curve which of the following is held constant?

Correct AnswerverifiedShow Answer

The natural rate of unemployment

Correct AnswerverifiedShow Answer

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
In the long run the natural rate of unem...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Phillips curve shows the relation be...
View Answer

Correct Answer
verified

Correct Answer
verified