Question 1

An event that directly affects firms' costs of production and thus the prices they charge is called

Accepted Answer

A)   a Phillips contraction.
B)   an inflationary spiral.
C)   a demand shock.
D)   a supply shock.E) B) and D)
F) C) and D)

Question 2

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 3

Figure 35-3  Refer to figure 35-3.In this order,which curve is a long-run Phillips curve and which is a short-run Phillips curve?
a.
A,B
b.
A,D
c.
C,B
d.
None of the above is correct.
ANS: B DIF: 1 REF: 35-2 NAT: Analytic
LOC: Unemployment and inflation TOP: Short-run Phillips curve | Long-run Phillips curve
MSC: Definitional
-Which of the following is upward 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) A) and D)
F) All of the above

Question 4

Which of the following would shift the long-run Phillips curve right?

Accepted Answer

A)   expansionary fiscal policy
B)   an increase in the inflation rate
C)   increases in unemployment compensation
D)   None of the above is correct.E) None of the above
F) A) and D)

Question 5

Figure 35-2
Use the pair of diagrams below to answer the following questions.  
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

Accepted Answer

A)   E and 1.
B)   D and 2.
C)   D and 3.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 6

Proponents of rational expectations argued that the sacrifice ratio

Accepted Answer

A)   could be high because it was rational for people not to immediately change their expectations.
B)   could be high because people might adjust their expectations quickly if they found anti-inflation policy credible.
C)   could be low because it was rational for people not to immediately change their expectations.
D)   could be low because people might adjust their expectations quickly if they found anti-inflation policy credible.E) A) and B)
F) A) and C)

Question 7

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

Question 8

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

Question 9

Figure
The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were impacting the economy.
-Refer to The Economy in 2008.In the short run the increased prices of world commodities

Accepted Answer

A)   raise both the price level and output.
B)   raise the price level and reduce output.
C)   reduce the price level and raise output.
D)   reduce both the price level and output.E) B) and C)
F) None of the above

Question 10

Which of the following would reduce the natural rate of unemployment?

Accepted Answer

A)   both an increase in the rate of money growth and increased unemployment compensation
B)   an increase in the rate of money growth but not increased unemployment compensation
C)   an increase in unemployment compensation but not an increase in the rate of money growth.
D)   neither an increase in unemployment compensation nor an increase in the rate of money growth.E) B) and C)
F) None of the above

Question 11

In the long run,the inflation rate depends primarily on the growth rate of the money supply..

Accepted Answer

A) True 
 B)False

Question 12

Figure 35-1.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 35-1.What is measured along the horizontal axis of the left-hand graph?

Accepted Answer

A)   the wage rate
B)   the inflation rate
C)   employment
D)   outputE) None of the above
F) B) and D)

Question 13

If policymakers decrease aggregate demand,then in the short run the price level

Accepted Answer

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

Question 14

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

Accepted Answer

A)   right,so that at any inflation rate unemployment is higher in the short run than before.
B)   left,so that at any inflation rate unemployment is higher in the short run than before.
C)   right,so that at any inflation rate unemployment is lower in the short run than before.
D)   left,so that at any inflation rate unemployment is lower in the short run than before.E) None of the above
F) A) and B)

Question 15

In the long run a reduction in the money supply growth rate effects

Accepted Answer

A)   the inflation rate and the natural rate of unemployment.
B)   the inflation rate but not the natural rate of unemployment.
C)   neither the inflation rate nor the natural rate of unemployment.
D)   the natural rate of unemployment,but not the inflation rate.E) None of the above
F) A) and D)

Question 16

If the Fed were to increase the money supply,inflation would increase and unemployment would decrease in the short run.

Accepted Answer

A) True 
 B)False

Question 17

In the long run,if the Fed decreases the rate at which it increases 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) B) and C)
F) None of the above

Question 18

The sacrifice ratio is the percentage point increase in the unemployment rate created in the process of reducing inflation by one percentage point.

Accepted Answer

A) True 
 B)False

Question 19

Figure 35-1.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 35-1.Assuming the price level in the previous year was 100,point F on the right-hand graph corresponds to

Accepted Answer

A)   point A on the left-hand graph.
B)   point B on the left-hand graph.
C)   point C on the left-hand graph.
D)   point D on the left-hand graph.E) B) and D)
F) A) and C)

Question 20

Figure 35-1.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 35-1.Assuming the price level in the previous year was 100,point G on the right-hand graph corresponds to

Accepted Answer

A)   point A on the left-hand graph.
B)   point B on the left-hand graph.
C)   point C on the left-hand graph.
D)   point D on the left-hand graph.E) C) and D)
F) A) and D)

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

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

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

Correct Answer
verified

In the long run,the inflation rate depends primarily on the growth rate of the money supply..

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Proponents of rational expectations argued that the sacrifice ratio

Correct Answer
verified

The sacrifice ratio is the percentage point increase in the unemployment rate created in the process of reducing inflation by one percentage point.

Correct Answer
verified

Which of the following would shift the long-run Phillips curve right?

Correct Answer
verified

If the Fed were to increase the money supply,inflation would increase and unemployment would decrease in the short run.

Correct Answer
verified

The experience of the Volcker disinflation of the early 1980s

Correct Answer
verified

An event that directly affects firms' costs of production and thus the prices they charge is called

Correct Answer
verified

In the long run a reduction in the money supply growth rate effects

Correct Answer
verified

Which of the following would reduce the natural rate of unemployment?

Correct Answer
verified

Correct Answer
verified

Figure The Economy in 2008 In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were impacting the economy. -Refer to The Economy in 2008.In the short run the increased prices of world commodities

Correct Answer
verified

Correct Answer
verified

Figure 35-1.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 35-1.What is measured along the horizontal axis of the left-hand graph?

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

If policymakers decrease aggregate demand,then in the short run the price level

Correct Answer
verified

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

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

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

Correct AnswerverifiedShow Answer

In the long run,the inflation rate depends primarily on the growth rate of the money supply..

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Proponents of rational expectations argued that the sacrifice ratio

Correct AnswerverifiedShow Answer

The sacrifice ratio is the percentage point increase in the unemployment rate created in the process of reducing inflation by one percentage point.

Correct AnswerverifiedShow Answer

Which of the following would shift the long-run Phillips curve right?

Correct AnswerverifiedShow Answer

If the Fed were to increase the money supply,inflation would increase and unemployment would decrease in the short run.

Correct AnswerverifiedShow Answer

The experience of the Volcker disinflation of the early 1980s

Correct AnswerverifiedShow Answer

An event that directly affects firms' costs of production and thus the prices they charge is called

Correct AnswerverifiedShow Answer

In the long run a reduction in the money supply growth rate effects

Correct AnswerverifiedShow Answer

Which of the following would reduce the natural rate of unemployment?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure The Economy in 2008 In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were impacting the economy. -Refer to The Economy in 2008.In the short run the increased prices of world commodities

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 35-1.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 35-1.What is measured along the horizontal axis of the left-hand graph?

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

If policymakers decrease aggregate demand,then in the short run the price level

Correct AnswerverifiedShow 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

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