Question 1

A central bank can reduce inflation by reducing money supply growth,but it necessarily does so at the cost of permanently raising the unemployment rate.

Accepted Answer

A) True 
 B)False

Question 2

If the natural rate of unemployment falls,

Accepted Answer

A)   both the short-run and long-run Phillips curves shift left.
B)   the short-run Phillips curve shifts left,the long-run Phillips curve is unchanged.
C)   the short-run Phillips curve is unchanged,the long-run Phillips curve shifts right.
D)   the short-run and the long-run Phillips curves shift right.E) C) and D)
F) A) and C)

Question 3

In the early 1970s,the short-run Phillips curve shifted

Accepted Answer

A)   right as inflation expectations rose.
B)   right as inflation expectations fell.
C)   left as inflation expectations rose.
D)   left as inflation expectations fell.E) A) and B)
F) A) and C)

Question 4

If there were a favorable supply shock and the central bank wanted to offset the change in the unemployment rate,what would it do?

Accepted Answer

It would r...

Question 5

The long-run Phillips curve is consistent with monetary neutrality implied by the classical dichotomy.

Accepted Answer

A) True 
 B)False

Question 6

According to the short-run Phillips curve,if the central bank increases the money supply,then

Accepted Answer

A)   inflation and unemployment will both fall.
B)   inflation and unemployment will both rise.
C)   inflation will fall and unemployment will rise.
D)   inflation will rise and unemployment will fall.E) None of the above
F) C) and D)

Question 7

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

Question 8

Although monetary policy cannot reduce the natural rate of unemployment,other types of government policies can.

Accepted Answer

A) True 
 B)False

Question 9

Other things constant,which of the following would reduce unemployment and raise inflation?

Accepted Answer

A)   businesses become more optimistic about the future of the economy
B)   because of high growth abroad,net exports rise
C)   the government cuts taxes
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 10

List one specific policy that would shift the long-run Phillips curve to the right.

Accepted Answer

More generous unempl...

Question 11

If inflation is less than expected,then the unemployment rate is

Accepted Answer

A)   greater than the natural rate.In the long run the short-run Phillips curve will shift right.
B)   greater than the natural rate.In the long run the short-run Phillips curve will shift left.
C)   less than the natural rate.In the long run the short-run Phillips curve will shift right.
D)   less than the natural rate.In the long run the short-run Phillips curve will shift left.E) A) and D)
F) A) and B)

Question 12

Which of the following implies that an increase in the money supply growth rate permanently changes the unemployment rate?

Accepted Answer

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

Question 13

If the central bank decreases the money supply,then output

Accepted Answer

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

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Friedman and Phelps argued that

Accepted Answer

A)   if peoples' inflation expectations were fixed,then an increase in the money supply growth rate could not change output in the short or long run.
B)   if peoples' inflation expectations were fixed,then a decrease in the money supply growth rate could raise output and unemployment in the short run.
C)   any change in unemployment created by making aggregate demand increase more rapidly is temporary because people eventually revise their inflation expectations.
D)   None of the above is correct.E) All of the above
F) None of the above

Question 16

If the Fed responded to an adverse supply shock by increasing the growth rate of the money supply and maintained the higher growth rate,what would eventually happen to the short-run Phillips curve? Why?

Accepted Answer

It would shift right...

Question 17

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 D)

Question 18

Figure 22-8.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 22-8.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) A) and C)
F) A) and B)

Question 19

A low sacrifice ratio would make a central bank less willing to reduce the inflation rate.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)   unemployment and prices rise.
B)   unemployment rises and prices fall.
C)   unemployment falls and prices rise.
D)   unemployment and prices fall.E) A) and D)
F) B) and D)

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

If the natural rate of unemployment falls,

Correct Answer
verified

Although monetary policy cannot reduce the natural rate of unemployment,other types of government policies can.

Correct Answer
verified

Other things constant,which of the following would reduce unemployment and raise inflation?

Correct Answer
verified

If inflation is less than expected,then the unemployment rate is

Correct Answer
verified

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

Correct Answer
verified

According to the short-run Phillips curve,if the central bank increases the money supply,then

Correct Answer
verified

In the early 1970s,the short-run Phillips curve shifted

Correct Answer
verified

Which of the following implies that an increase in the money supply growth rate permanently changes the unemployment rate?

Correct Answer
verified

If the central bank decreases the money supply,then output

Correct Answer
verified

Friedman and Phelps argued that

Correct Answer
verified

Disinflation is defined as a

Correct Answer
verified

A central bank can reduce inflation by reducing money supply growth,but it necessarily does so at the cost of permanently raising the unemployment rate.

Correct Answer
verified

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

Correct Answer
verified

If the Fed responded to an adverse supply shock by increasing the growth rate of the money supply and maintained the higher growth rate,what would eventually happen to the short-run Phillips curve? Why?

Correct Answer
verified
It would shift right...
View Answer

A low sacrifice ratio would make a central bank less willing to reduce the inflation rate.

Correct Answer
verified

If there were a favorable supply shock and the central bank wanted to offset the change in the unemployment rate,what would it do?

Correct Answer
verified
It would r...
View Answer

Correct Answer
verified

The long-run Phillips curve is consistent with monetary neutrality implied by the classical dichotomy.

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

List one specific policy that would shift the long-run Phillips curve to the right.

Correct Answer
verified
More generous unempl...
View Answer

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

If the natural rate of unemployment falls,

Correct AnswerverifiedShow Answer

Although monetary policy cannot reduce the natural rate of unemployment,other types of government policies can.

Correct AnswerverifiedShow Answer

Other things constant,which of the following would reduce unemployment and raise inflation?

Correct AnswerverifiedShow Answer

If inflation is less than expected,then the unemployment rate is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to the short-run Phillips curve,if the central bank increases the money supply,then

Correct AnswerverifiedShow Answer

In the early 1970s,the short-run Phillips curve shifted

Correct AnswerverifiedShow Answer

Which of the following implies that an increase in the money supply growth rate permanently changes the unemployment rate?

Correct AnswerverifiedShow Answer

If the central bank decreases the money supply,then output

Correct AnswerverifiedShow Answer

Friedman and Phelps argued that

Correct AnswerverifiedShow Answer

Disinflation is defined as a

Correct AnswerverifiedShow Answer

A central bank can reduce inflation by reducing money supply growth,but it necessarily does so at the cost of permanently raising the unemployment rate.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the Fed responded to an adverse supply shock by increasing the growth rate of the money supply and maintained the higher growth rate,what would eventually happen to the short-run Phillips curve? Why?

Correct AnswerverifiedIt would shift right...View AnswerShow Answer

A low sacrifice ratio would make a central bank less willing to reduce the inflation rate.

Correct AnswerverifiedShow Answer

If there were a favorable supply shock and the central bank wanted to offset the change in the unemployment rate,what would it do?

Correct AnswerverifiedIt would r...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The long-run Phillips curve is consistent with monetary neutrality implied by the classical dichotomy.

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

List one specific policy that would shift the long-run Phillips curve to the right.

Correct AnswerverifiedMore generous unempl...View AnswerShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

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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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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Correct Answer
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It would shift right...
View Answer

Correct Answer
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Correct Answer
verified
It would r...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
More generous unempl...
View Answer