Question 1

If the economy is at the point where the short-run Phillips curve intersects the long-run Phillips curve,

Accepted Answer

A)   unemployment equals the natural rate and expected inflation equals actual inflation.
B)   unemployment is above the natural rate and expected inflation equals actual inflation.
C)   unemployment equals the natural rate and expected inflation is greater than actual inflation.
D)   None of the above is necessarily correct.E) A) and C)
F) All of the above

Question 2

If the Federal Reserve accommodates an adverse supply shock,

Accepted Answer

A)   inflation expectations may rise which shifts the short-run Phillips curve shifts right.
B)   inflation expectations may rise which shifts the short-run Phillips curve shifts left.
C)   inflation expectations may fall which shifts the short-run Phillips curve shifts right.
D)   inflation expectations may fall which shifts the short-run Phillips curve shifts leftE) B) and D)
F) B) and C)

Question 3

What would a central bank need to do to reverse the effects of a favorable supply shock on inflation? What would its reaction do to the unemployment rate in the short run?

Accepted Answer

It would increase the money su...

Question 4

One way to express the classical idea of monetary neutrality is to draw

Accepted Answer

A)   a downward-sloping short-run Phillips curve.
B)   an upward-sloping short-run Phillips curve.
C)   a downward-sloping long-run Phillips curve.
D)   a vertical long-run Phillips curve.E) B) and D)
F) A) and B)

Question 5

The monetary-policy framework called inflation targeting is used explicitly by

Accepted Answer

A)   no major country.
B)   most major countries except the United States and Japan.
C)   the United States, but it is not used by other major countries.
D)   most major countries, including the United States and Japan.E) B) and C)
F) A) and D)

Question 6

According to the Phillips curve, unemployment and inflation are negatively related in

Accepted Answer

A)   the short run and in the long run.
B)   the short run, but not in the long run.
C)   the long run, but not in the short run.
D)   neither the long run nor the short run.E) A) and B)
F) A) and D)

Question 7

Figure 35-6
Use the graph below to answer the following questions. 
-Refer to Figure 35-6. If the economy starts at C and the money supply growth rate increases, then in the short run the economy moves to

Accepted Answer

A)   B.
B)   D.
C)   F.
D)   None of the above is consistent with an increase in the money supply growth rate.E) A) and C)
F) B) and C)

Question 8

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 D)
F) None of the above

Question 9

Figure 35-9. 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."  
-Refer to Figure 35-9. A movement of the economy from point A to point B, and at the same time a movement from point C to point D, would be described as

Accepted Answer

A)   the outcome of a favorable supply shock.
B)   falling inflation.
C)   stagflation.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 10

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Accepted Answer

A)   adverse supply shocks that shifted the short-run Phillips curve left.
B)   adverse supply shocks that shifted the short-run Phillips curve right.
C)   favorable supply shocks that shifted the short-run Phillips curve left.
D)   favorable supply shocks that shifted the short-run Phillips curve right.E) B) and C)
F) A) and B)

Question 11

Other things the same, a country that decides to reduce inflation will

Accepted Answer

A)   have a higher unemployment rate in the short run and the long run.
B)   have a higher unemployment rate only in the long run.
C)   have a higher unemployment rate only in the short run.
D)   not have a higher unemployment rate in either the short run or the long run.E) B) and C)
F) A) and B)

Question 12

A policy intended to reduce unemployment by taking advantage of a tradeoff between inflation and unemployment leads to

Accepted Answer

A)   both higher inflation and higher unemployment in the long run.
B)   higher inflation and no change in unemployment in the long run.
C)   the same inflation rate and lower unemployment in the long run.
D)   higher inflation and lower unemployment in the long runE) None of the above
F) A) and B)

Question 13

A.W. Phillips found a

Accepted Answer

A)   positive relation between unemployment and inflation in the United Kingdom.
B)   positive relation between unemployment and inflation in the United States.
C)   negative relation between unemployment and inflation in the United States.
D)   negative relation between unemployment and inflation in the United Kingdom.E) None of the above
F) C) and D)

Question 14

Prime Minister Emma Bigshot urges passage of a bill to reduce unemployment benefits from very generous levels in her country. She also urges her country's central bank to raise the rate at which the money supply is increasing. In the long run which, if either, of these policies will reduce the unemployment rate?

Accepted Answer

A)   both reducing the generosity of unemployment benefits and raising the rate at which the money supply is increasing
B)   reducing the generosity of unemployment benefits but not raising the rate at which the money supply is increasing
C)   raising the rate at which the money supply is increasing, but not reducing the generosity of unemployment benefits
D)   neither reducing the generosity of unemployment benefits nor raising the rate at which the money supply is increasingE) B) and D)
F) All of the above

Question 15

In the long run, if the Fed decreases the growth rate of the money supply,

Accepted Answer

A)   inflation will be lower.
B)   unemployment will be higher.
C)   real GDP will be lower.
D)   All of the above are correct.E) A) and C)
F) B) and C)

Question 16

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Accepted Answer

A)   the inflation rate decreases.
B)   the government increases its expenditures.
C)   the Fed increases the money supply.
D)   None of the above is correct.E) C) and D)
F) A) and B)

Question 17

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) A) and C)

Question 18

Which of the following shifts the long-run Phillips curve left?

Accepted Answer

A)   both an increase in the inflation rate and a decrease in the minimum wage rate
B)   an increase in the inflation rate, but not a decrease in the minimum wage rate
C)   a decrease in the minimum wage rate, but not an increase in the inflation rate
D)   neither a decrease in the minimum wage rate nor an increase in the inflation rateE) B) and D)
F) A) and D)

Question 19

Refer to Figure 35-4. 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)   117.25.
B)   114.95.
C)   113.12.
D)   111.10.E) B) and D)
F) None of the above

Question 20

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 B)
F) A) and C)

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

In the long run, if the Fed decreases the growth rate of the money supply,

Correct Answer
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Correct Answer
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During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Correct Answer
verified

Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6. If the economy starts at C and the money supply growth rate increases, then in the short run the economy moves to

Correct Answer
verified

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

The monetary-policy framework called inflation targeting is used explicitly by

Correct Answer
verified

A policy intended to reduce unemployment by taking advantage of a tradeoff between inflation and unemployment leads to

Correct Answer
verified

What would a central bank need to do to reverse the effects of a favorable supply shock on inflation? What would its reaction do to the unemployment rate in the short run?

Correct Answer
verified
It would increase the money su...
View Answer

If the Federal Reserve accommodates an adverse supply shock,

Correct Answer
verified

According to the Phillips curve, unemployment and inflation are negatively related in

Correct Answer
verified

If the economy is at the point where the short-run Phillips curve intersects the long-run Phillips curve,

Correct Answer
verified

An increase in expected inflation shifts the

Correct Answer
verified

One way to express the classical idea of monetary neutrality is to draw

Correct Answer
verified

Which of the following shifts the long-run Phillips curve left?

Correct Answer
verified

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

Correct Answer
verified

A.W. Phillips found a

Correct Answer
verified

Correct Answer
verified

Other things the same, a country that decides to reduce inflation will

Correct Answer
verified

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Correct Answer
verified

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

In the long run, if the Fed decreases the growth rate of the money supply,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Correct AnswerverifiedShow Answer

Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6. If the economy starts at C and the money supply growth rate increases, then in the short run the economy moves to

Correct AnswerverifiedShow Answer

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

The monetary-policy framework called inflation targeting is used explicitly by

Correct AnswerverifiedShow Answer

A policy intended to reduce unemployment by taking advantage of a tradeoff between inflation and unemployment leads to

Correct AnswerverifiedShow Answer

What would a central bank need to do to reverse the effects of a favorable supply shock on inflation? What would its reaction do to the unemployment rate in the short run?

Correct AnswerverifiedIt would increase the money su...View AnswerShow Answer

If the Federal Reserve accommodates an adverse supply shock,

Correct AnswerverifiedShow Answer

According to the Phillips curve, unemployment and inflation are negatively related in

Correct AnswerverifiedShow Answer

If the economy is at the point where the short-run Phillips curve intersects the long-run Phillips curve,

Correct AnswerverifiedShow Answer

An increase in expected inflation shifts the

Correct AnswerverifiedShow Answer

One way to express the classical idea of monetary neutrality is to draw

Correct AnswerverifiedShow Answer

Which of the following shifts the long-run Phillips curve left?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A.W. Phillips found a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things the same, a country that decides to reduce inflation will

Correct AnswerverifiedShow Answer

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Correct AnswerverifiedShow Answer

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It would increase the money su...
View Answer

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