Question 1

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Accepted Answer

A)   Mark gets an increase in his nominal wage.
B)   Bob gets more job offers.
C)   Susan reduces prices at her pizza restaurant.
D)   Tom reads that the central bank recently raised the money supplyE) B) and D)
F) C) and D)

Question 2

Neither monetary policy nor any government policy can change the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 3

The long-run response to an increase in the growth rate of the money supply is shown by shifting

Accepted Answer

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

Question 4

The government of Blenova considers two policies. Policy A would shift AD right by 500 units while policy B would shift AD right by 300 units. According to the short-run Phillips curve, policy A will lead

Accepted Answer

A)   to a lower unemployment rate and a lower inflation rate than policy B.
B)   to a lower unemployment rate and a higher inflation rate than policy B.
C)   to a higher unemployment rate and lower inflation rate than policy B.
D)   to a higher unemployment rate and higher inflation rate than policy B.E) B) and C)
F) A) and D)

Question 5

According to the Friedman-Phelps analysis, in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Accepted Answer

A) True 
 B)False

Question 6

A favorable supply shock will cause the price level

Accepted Answer

A)   and output to rise.
B)   and output to fall.
C)   to rise and output to fall.
D)   to fall and output to rise.E) None of the above
F) C) and D)

Question 7

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Accepted Answer

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

Question 8

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) B) and C)

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. Which of the following events could explain the shift of the aggregate-supply curve from AS1 to AS2?

Accepted Answer

A)   a reduction in firms' costs of production
B)   a reduction in taxes on consumers
C)   an increase in the price level
D)   an increase in the world price of oilE) A) and D)
F) B) and C)

Question 10

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) C) and D)

Question 11

If unemployment is below its natural rate, what happens to move the economy to long-run equilibrium?

Accepted Answer

A)   Inflation expectations rise which shifts the short-run Phillips curve to the right.
B)   Inflation expectations rise which shifts the short-run Phillips curve to the left.
C)   Inflation expectations fall which shifts the short-run Phillips curve to the right.
D)   Inflation expectations fall which shifts the short-run Phillips curve to the left.E) All of the above
F) C) and D)

Question 12

What evidence does the Volcker disinflation provide concerning the importance of inflation expectations to the costs of disinflation?

Accepted Answer

Unemployment did rise. However, the sacr...

Question 13

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

Accepted Answer

A)   Inflation expectations rise which shifts the short-run Phillips curve to the right.
B)   Inflation expectations rise which shifts the short-run Phillips curve to the left.
C)   Inflation expectations fall which shifts the short-run Phillips curve to the right.
D)   Inflation expectations fall which shifts the short-run Phillips curve to the left.E) None of the above
F) All of the above

Question 14

In the late 1960's, Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Accepted Answer

A)   existed in the long run and the short run.
B)   existed in the long run but not the short run.
C)   existed in the short run but not the long run.
D)   did not exist.E) A) and B)
F) All of the above

Question 15

An adverse supply shock shifts the short-run Phillips curve to the left.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is downward-sloping?

Accepted Answer

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

Question 17

What is meant by accommodation?

Accepted Answer

A central bank is said to acco...

Question 18

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) All of the above
F) B) and C)

Question 19

The short-run Phillips curve intersects the long-run Phillips curve where

Accepted Answer

A)   the actual rate of inflation equals the expected rate of inflation.
B)   the actual rate of unemployment equals the natural rate of unemployment.
C)   Both A and B are correct.
D)   None of the above is correct.E) A) and D)
F) C) and D)

Question 20

The long-run Phillips curve would shift left if

Accepted Answer

A)   the money supply increased or if the minimum wage was reduced.
B)   the money supply increased but not if the minimum wage was reduced.
C)   the minimum wage was reduced but not if the money supply increased.
D)   None of the above is correct.E) A) and B)
F) A) and C)

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

What evidence does the Volcker disinflation provide concerning the importance of inflation expectations to the costs of disinflation?

Correct Answer
verified
Unemployment did rise. However, the sacr...
View Answer

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

The government of Blenova considers two policies. Policy A would shift AD right by 500 units while policy B would shift AD right by 300 units. According to the short-run Phillips curve, policy A will lead

Correct Answer
verified

A favorable supply shock will cause the price level

Correct Answer
verified

According to the Friedman-Phelps analysis, in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Correct Answer
verified

In the late 1960's, Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Correct Answer
verified

The long-run Phillips curve would shift left if

Correct Answer
verified

If unemployment is below its natural rate, what happens to move the economy to long-run equilibrium?

Correct Answer
verified

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

Correct Answer
verified

Neither monetary policy nor any government policy can change the natural rate of unemployment.

Correct Answer
verified

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Correct Answer
verified

An adverse supply shock shifts the short-run Phillips curve to the left.

Correct Answer
verified

The short-run Phillips curve intersects the long-run Phillips curve where

Correct Answer
verified

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

If the central bank decreases the money supply, then output

Correct Answer
verified

What is meant by accommodation?

Correct Answer
verified
A central bank is said to acco...
View Answer

The long-run response to an increase in the growth rate of the money supply is shown by shifting

Correct Answer
verified

Which of the following is downward-sloping?

Correct Answer
verified

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

What evidence does the Volcker disinflation provide concerning the importance of inflation expectations to the costs of disinflation?

Correct AnswerverifiedUnemployment did rise. However, the sacr...View AnswerShow Answer

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The government of Blenova considers two policies. Policy A would shift AD right by 500 units while policy B would shift AD right by 300 units. According to the short-run Phillips curve, policy A will lead

Correct AnswerverifiedShow Answer

A favorable supply shock will cause the price level

Correct AnswerverifiedShow Answer

According to the Friedman-Phelps analysis, in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Correct AnswerverifiedShow Answer

In the late 1960's, Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Correct AnswerverifiedShow Answer

The long-run Phillips curve would shift left if

Correct AnswerverifiedShow Answer

If unemployment is below its natural rate, what happens to move the economy to long-run equilibrium?

Correct AnswerverifiedShow Answer

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

Correct AnswerverifiedShow Answer

Neither monetary policy nor any government policy can change the natural rate of unemployment.

Correct AnswerverifiedShow Answer

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Correct AnswerverifiedShow Answer

An adverse supply shock shifts the short-run Phillips curve to the left.

Correct AnswerverifiedShow Answer

The short-run Phillips curve intersects the long-run Phillips curve where

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

If the central bank decreases the money supply, then output

Correct AnswerverifiedShow Answer

What is meant by accommodation?

Correct AnswerverifiedA central bank is said to acco...View AnswerShow Answer

The long-run response to an increase in the growth rate of the money supply is shown by shifting

Correct AnswerverifiedShow Answer

Which of the following is downward-sloping?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Unemployment did rise. However, the sacr...
View 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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Correct Answer
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Correct Answer
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Correct Answer
verified
A central bank is said to acco...
View Answer

Correct Answer
verified

Correct Answer
verified