Question 1

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

Question 2

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) B) and D)
F) A) and D)

Question 3

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

Question 4

According to classical macroeconomic theory, in the long run

Accepted Answer

A)  monetary growth affects both real and nominal variables.
B)  the only real variable affected by monetary growth is the unemployment rate.
C)  a number of factors that affect unemployment are influenced by monetary growth.
D)  monetary growth affects nominal but not real variables.E) B) and C)
F) None of the above

Question 5

In 2001, Congress and President Bush instituted tax cuts. According to the short-run Phillips curve, in the short run this change should have

Accepted Answer

A)  reduced inflation and unemployment.
B)  raised inflation and unemployment.
C)  reduce inflation and raised unemployment.
D)  raised inflation and reduced unemployment.E) All of the above
F) A) and C)

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 depicts possible outcomes for the year 2018. In 2018, the economy is at point A on the left-hand graph, which corresponds to point A on the right-hand graph. The price level in the year 2017 was

Accepted Answer

A)  144.
B)  150.
C)  152.
D)  156.E) A) and C)
F) C) and D)

Question 7

What does the natural-rate hypothesis claim?

Accepted Answer

That eventually unem...

Question 8

Suppose that an economy is currently experiencing 10 percent unemployment and 15 percent inflation. If in the process of bringing inflation down by 2 percentage points, real GDP falls by 6 percent for a year, the sacrifice ratio is

Accepted Answer

A)  5.
B)  2.
C)  12.
D)  None of the above is correct.E) C) and D)
F) A) and D)

Question 9

The experience of the Volcker disinflation of the early 1980s

Accepted Answer

A)  generally increased estimates of the sacrifice ratio.
B)  generally decreased estimates of the sacrifice ratio.
C)  clearly refuted the predictions of the proponents of rational expectations.
D)  clearly refuted the predictions of the opponents of rational expectations.E) None of the above
F) All of the above

Question 10

Suppose the central bank increases the growth rate of the money supply. In the long run, which of the following is unaffected by this change in policy?

Accepted Answer

A)  the unemployment rate and the inflation rate
B)  the unemployment rate but not the inflation rate
C)  the inflation rate but not the unemployment rate
D)  neither the inflation rate nor the unemployment rateE) A) and B)
F) B) and C)

Question 11

Use the sticky-wage theory of aggregate demand to explain the short-run Phillips curve.

Accepted Answer

According to the sticky-wage theory, nom...

Question 12

In the long run, a decrease in the money supply growth rate

Accepted Answer

A)  shifts the short-run Phillips curve left so inflation returns to its original rate.
B)  shifts the short-run Phillips curve left so unemployment returns to its natural rate.
C)  Both A and B are correct.
D)  None of the above is correct.E) A) and D)
F) A) and C)

Question 13

A country is likely to have a higher sacrifice ratio if

Accepted Answer

A)  contracts are shorter, and people believe the central bank will reduce inflation.
B)  contracts are longer, and people believe the central bank will not reduce inflation
C)  contracts are longer, and people believe the central bank will reduce inflation.
D)  contracts are shorter, and people believe the central bank will not reduce inflation.E) C) and D)
F) B) and C)

Question 14

A favorable supply shock will cause inflation to

Accepted Answer

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

Question 15

A.W. Phillips's discovery of a particular relationship between unemployment and inflation for the United Kingdom

Accepted Answer

A)  could not be extended to other countries, despite many researchers' attempts to provide that extension.
B)  was quickly extended to other countries by researchers.
C)  was extended to only one other country - the United States.
D)  was harshly criticized by the American economists Paul Samuelson and Robert Solow on the grounds that Phillips's study was fundamentally flawed.E) A) and C)
F) All of the above

Question 16

If inflation expectations rise, the short-run Phillips curve shifts

Accepted Answer

A)  right, so that at any unemployment rate inflation is higher in the short run than before.
B)  left, so that at any unemployment rate inflation is higher in the short run the before.
C)  right, so that at any unemployment rate inflation is lower in the short run than before.
D)  left, so that at any unemployment rate inflation is lower in the short run than before.E) All of the above
F) A) and B)

Question 17

If the central bank increases the growth rate of the money supply and initially inflation expectations are unchanged, then in the short run

Accepted Answer

A)  unemployment rises. In the long run the short-run Phillips curve shifts left.
B)  unemployment rises. In the long run the short-run Phillips curve shifts right.
C)  unemployment falls. In the long run the short-run the Phillips curve shifts left.
D)  unemployment falls. In the long run the short-run the Phillips curve shifts right.E) None of the above
F) A) and B)

Question 18

Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then inflation expectations rise to 2% and inflation rises to 3%. The increase in expected inflation shifts the short-run Phillips curve

Accepted Answer

A)  right. Overall, unemployment moves above its natural rate.
B)  right. Overall, unemployment moves below its natural rate.
C)  left. Overall, unemployment moves above its natural rate.
D)  left. Overall, unemployment moves below its natural rate.E) None of the above
F) A) and B)

Question 19

Suppose that as a result of a stock market boom, consumers become less concerned about saving for retirement and increase their current consumption expenditures. Which of the following would you expect to occur as a result of this change?

Accepted Answer

A)  In the short run, unemployment will increase and inflation will fall.
B)  ​In the short run, unemployment will increase and inflation will rise.
C)  ​In the short run, unemployment will decrease and inflation will rise.
D)  ​In the short run, unemployment will decrease and inflation will fall.E) A) and B)
F) B) and C)

Question 20

In 1980, the combination of inflation and unemployment the U.S. was experiencing

Accepted Answer

A)  resulted from a leftward shift of the short-run Phillips curve.
B)  was consistent with feasible inflation-unemployment combinations provided by the Phillips curve of the 1960s.
C)  followed two supply shocks that were triggered by the Organization of Petroleum Exporting Countries.
D)  All of the above are correct.E) A) and B)
F) All of the above

Exam 35: The Short-Run Tradeoff Between Inflation and Unemployment

If inflation expectations rise, the short-run Phillips curve shifts

Correct Answer
verified

A country is likely to have a higher sacrifice ratio if

Correct Answer
verified

In 1980, the combination of inflation and unemployment the U.S. was experiencing

Correct Answer
verified

Suppose that as a result of a stock market boom, consumers become less concerned about saving for retirement and increase their current consumption expenditures. Which of the following would you expect to occur as a result of this change?

Correct Answer
verified

A.W. Phillips's discovery of a particular relationship between unemployment and inflation for the United Kingdom

Correct Answer
verified

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

Correct Answer
verified

The experience of the Volcker disinflation of the early 1980s

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

What does the natural-rate hypothesis claim?

Correct Answer
verified
That eventually unem...
View Answer

Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then inflation expectations rise to 2% and inflation rises to 3%. The increase in expected inflation shifts the short-run Phillips curve

Correct Answer
verified

Suppose that an economy is currently experiencing 10 percent unemployment and 15 percent inflation. If in the process of bringing inflation down by 2 percentage points, real GDP falls by 6 percent for a year, the sacrifice ratio is

Correct Answer
verified

In the long run, a decrease in the money supply growth rate

Correct Answer
verified

Suppose the central bank increases the growth rate of the money supply. In the long run, which of the following is unaffected by this change in policy?

Correct Answer
verified

According to classical macroeconomic theory, in the long run

Correct Answer
verified

If the central bank increases the growth rate of the money supply and initially inflation expectations are unchanged, then in the short run

Correct Answer
verified

A favorable supply shock will cause inflation to

Correct Answer
verified

In 2001, Congress and President Bush instituted tax cuts. According to the short-run Phillips curve, in the short run this change should have

Correct Answer
verified

Use the sticky-wage theory of aggregate demand to explain the short-run Phillips curve.

Correct Answer
verified
According to the sticky-wage theory, nom...
View Answer

Exam 35: The Short-Run Tradeoff Between Inflation and Unemployment

If inflation expectations rise, the short-run Phillips curve shifts

Correct AnswerverifiedShow Answer

A country is likely to have a higher sacrifice ratio if

Correct AnswerverifiedShow Answer

In 1980, the combination of inflation and unemployment the U.S. was experiencing

Correct AnswerverifiedShow Answer

Suppose that as a result of a stock market boom, consumers become less concerned about saving for retirement and increase their current consumption expenditures. Which of the following would you expect to occur as a result of this change?

Correct AnswerverifiedShow Answer

A.W. Phillips's discovery of a particular relationship between unemployment and inflation for the United Kingdom

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The experience of the Volcker disinflation of the early 1980s

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What does the natural-rate hypothesis claim?

Correct AnswerverifiedThat eventually unem...View AnswerShow Answer

Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then inflation expectations rise to 2% and inflation rises to 3%. The increase in expected inflation shifts the short-run Phillips curve

Correct AnswerverifiedShow Answer

Suppose that an economy is currently experiencing 10 percent unemployment and 15 percent inflation. If in the process of bringing inflation down by 2 percentage points, real GDP falls by 6 percent for a year, the sacrifice ratio is

Correct AnswerverifiedShow Answer

In the long run, a decrease in the money supply growth rate

Correct AnswerverifiedShow Answer

Suppose the central bank increases the growth rate of the money supply. In the long run, which of the following is unaffected by this change in policy?

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory, in the long run

Correct AnswerverifiedShow Answer

If the central bank increases the growth rate of the money supply and initially inflation expectations are unchanged, then in the short run

Correct AnswerverifiedShow Answer

A favorable supply shock will cause inflation to

Correct AnswerverifiedShow Answer

In 2001, Congress and President Bush instituted tax cuts. According to the short-run Phillips curve, in the short run this change should have

Correct AnswerverifiedShow Answer

Use the sticky-wage theory of aggregate demand to explain the short-run Phillips curve.

Correct AnswerverifiedAccording to the sticky-wage theory, nom...View AnswerShow 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
That eventually unem...
View 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
According to the sticky-wage theory, nom...
View Answer