Question 1

In the late 1960s,economist Edmund Phelps published a paper that

Accepted Answer

A)   argued that there was no long-run tradeoff between inflation and unemployment.
B)   disproved Friedman's claim that monetary policy was effective in controlling inflation.
C)   showed the optimal point on the Phillips curve was at an unemployment rate of 5 percent and an inflation rate of 2 percent.
D)   argued that the Phillips curve was stable and that it would not shift.E) B) and C)
F) All of the above

Question 2

In the long run,an increase in the money supply

Accepted Answer

A)   leaves prices and unemployment unchanged.
B)   raises prices and unemployment.
C)   raises prices and leaves unemployment unchanged.
D)   leaves prices unchanged and reduces unemployment.E) A) and D)
F) A) and B)

Question 3

Which of the following would cause the price level to rise and output to fall in the short run?

Accepted Answer

A)   an increase in the money supply
B)   a decrease in the money supply
C)   an adverse supply shock
D)   a favorable supply shockE) A) and B)
F) A) and C)

Question 4

Which of the following is correct concerning the long-run Phillips curve?

Accepted Answer

A)   Its position is determined primarily by monetary factors.
B)   If it shifts right,long-run aggregate supply shifts right.
C)   It cannot be changed by any government policy.
D)   Its position depends on the natural rate of unemployment.E) A) and B)
F) B) and C)

Question 5

The analysis of Friedman and Phelps argues that an expected change in inflation has no impact on the unemployment rate.

Accepted Answer

A) True 
 B)False

Question 6

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.What is measured along the vertical axis of the right-hand graph?

Accepted Answer

A)   the interest rate
B)   the inflation rate
C)   the wage rate
D)   the growth rate of the nominal money supplyE) A) and B)
F) A) and C)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is downward-sloping?

Accepted Answer

A)   both the long-run Phillips curve and the short-run Phillips curve
B)   neither the long-run Phillips curve nor the short-run Phillips curve
C)   the long-run Phillips curve,but not the short-run Phillips curve
D)   the short-run Phillips curve,but not the long-run Phillips curveE) A) and B)
F) All of the above

Question 9

In the United States during the 1970s,expected inflation

Accepted Answer

A)   rose substantially.
B)   rose slightly.
C)   fell slightly.
D)   fell substantially.E) A) and D)
F) A) and B)

Question 10

Other things the same,in the long run a country that reduces the minimum wage from very high levels will have

Accepted Answer

A)   higher unemployment and lower inflation
B)   lower unemployment and higher inflation
C)   higher unemployment and the same level of inflation
D)   lower unemployment and the same level of inflationE) A) and C)
F) None of the above

Question 11

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 D)
F) All of the above

Question 12

In the long run,if the Fed decreases the rate at which it increases the money supply,

Accepted Answer

A)   inflation and unemployment will be higher.
B)   inflation will be higher and unemployment will be lower.
C)   inflation will be lower and unemployment will be higher.
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 13

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 C)
F) B) and D)

Question 14

A central bank announces it will decrease the inflation rate by 10 percentage points.People are skeptical of the announcement,but do expect the central bank will reduce inflation by 5 percentage points and so expected inflation falls by 5 percentage points.If the central bank decreases inflation by only 3 percentage points then the unemployment rate will fall.

Accepted Answer

A) True 
 B)False

Question 15

When they are confronted with an adverse shock to aggregate supply,policymakers face a difficult choice in that

Accepted Answer

A)   if they contract aggregate demand,the unemployment rate will increase further.
B)   if they expand aggregate demand,the inflation rate will increase further.
C)   they face a less favorable trade-off between inflation and unemployment than they did before the shock.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 16

Figure 22-6
Use the two graphs in the diagram to answer the following questions.

-Refer to Figure 22-6.Starting from C and 3,in the short run an unexpected increase 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 D)

Question 17

An increase in inflation expectations shifts the short-run Phillips curve right and has no effect on the long-run Phillips curve.

Accepted Answer

A) True 
 B)False

Question 18

If people anticipate higher inflation,but inflation remains the same then

Accepted Answer

A)   the short-run Phillips curve would shift right and unemployment would rise.
B)   the short-run Phillips curve would shift right and unemployment would fall.
C)   the short-run Phillips curve would shift left and unemployment would rise.
D)   the short-run Phillips curve would shift left and unemployment would fall.E) B) and C)
F) C) and D)

Question 19

If people correctly anticipate that inflation will fall by 1%,then

Accepted Answer

A)   the short-run Phillips curve shifts right and unemployment is unchanged.
B)   the short-run Phillips curve shifts right and unemployment rises.
C)   the short-run Phillips curve shifts left and unemployment is unchanged.
D)   the short-run Phillips curve would shift left and unemployment falls.E) B) and D)
F) All of the above

Question 20

According to the Phillips curve,which fiscal policies can be used to reduce unemployment in the short run?

Accepted Answer

An increase in gover...

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

According to the Phillips curve,which fiscal policies can be used to reduce unemployment in the short run?

Correct Answer
verified
An increase in gover...
View Answer

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

Correct Answer
verified

When they are confronted with an adverse shock to aggregate supply,policymakers face a difficult choice in that

Correct Answer
verified

Which of the following would cause the price level to rise and output to fall in the short run?

Correct Answer
verified

The analysis of Friedman and Phelps argues that an expected change in inflation has no impact on the unemployment rate.

Correct Answer
verified

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.What is measured along the vertical axis of the right-hand graph?

Correct Answer
verified

Which of the following is downward-sloping?

Correct Answer
verified

Figure 22-6 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 22-6.Starting from C and 3,in the short run an unexpected increase in money supply growth moves the economy to

Correct Answer
verified

Which of the following is correct concerning the long-run Phillips curve?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

In the United States during the 1970s,expected inflation

Correct Answer
verified

An increase in inflation expectations shifts the short-run Phillips curve right and has no effect on the long-run Phillips curve.

Correct Answer
verified

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

Correct Answer
verified

In the long run,if the Fed decreases the rate at which it increases the money supply,

Correct Answer
verified

Other things the same,in the long run a country that reduces the minimum wage from very high levels will have

Correct Answer
verified

In the long run,an increase in the money supply

Correct Answer
verified

In the late 1960s,economist Edmund Phelps published a paper that

Correct Answer
verified

If people correctly anticipate that inflation will fall by 1%,then

Correct Answer
verified

If people anticipate higher inflation,but inflation remains the same then

Correct Answer
verified

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

According to the Phillips curve,which fiscal policies can be used to reduce unemployment in the short run?

Correct AnswerverifiedAn increase in gover...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When they are confronted with an adverse shock to aggregate supply,policymakers face a difficult choice in that

Correct AnswerverifiedShow Answer

Which of the following would cause the price level to rise and output to fall in the short run?

Correct AnswerverifiedShow Answer

The analysis of Friedman and Phelps argues that an expected change in inflation has no impact on the unemployment rate.

Correct AnswerverifiedShow Answer

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.What is measured along the vertical axis of the right-hand graph?

Correct AnswerverifiedShow Answer

Which of the following is downward-sloping?

Correct AnswerverifiedShow Answer

Figure 22-6 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 22-6.Starting from C and 3,in the short run an unexpected increase in money supply growth moves the economy to

Correct AnswerverifiedShow Answer

Which of the following is correct concerning the long-run Phillips curve?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the United States during the 1970s,expected inflation

Correct AnswerverifiedShow Answer

An increase in inflation expectations shifts the short-run Phillips curve right and has no effect on the long-run Phillips curve.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the long run,if the Fed decreases the rate at which it increases the money supply,

Correct AnswerverifiedShow Answer

Other things the same,in the long run a country that reduces the minimum wage from very high levels will have

Correct AnswerverifiedShow Answer

In the long run,an increase in the money supply

Correct AnswerverifiedShow Answer

In the late 1960s,economist Edmund Phelps published a paper that

Correct AnswerverifiedShow Answer

If people correctly anticipate that inflation will fall by 1%,then

Correct AnswerverifiedShow Answer

If people anticipate higher inflation,but inflation remains the same then

Correct AnswerverifiedShow Answer

Correct Answer
verified
An increase in gover...
View Answer

Correct Answer
verified

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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