Question 1

Figure 16-5
 
-Refer to Figure 16-5.The shifts of aggregate demand from points a to b to c to d are Characteristic of which phase(s) of the inflation-unemployment cycle?

Accepted Answer

A)  the Phillips phase to the stagflation phase
B)  the Phillips phase to the recovery phase
C)  the Phillips phase
D)  the Phillips phase to the stagflation phase and to recovery phaseE) B) and C)
F) None of the above

Question 2

A decrease in the money supply will shift the AD curve to the left.

Accepted Answer

A) True 
 B)False

Question 3

Figure 16-1
 
-Refer to Figure 16-1.Consider point A where inflation is relatively high and unemployment
Is relatively low.In order to move down the curve toward point B, what fiscal policy measures should the policymakers undertake?

Accepted Answer

A)  decrease taxes and government spending
B)  increase taxes and government spending
C)  increase taxes and decrease government spending
D)  decrease taxes and increase government spendingE) All of the above
F) A) and C)

Question 4

Figure 16-1
 
-Refer to Figure 16-1.Moving from B to A shows a tradeoff of

Accepted Answer

A)  more unemployment for less inflation.
B)  less unemployment for more inflation.
C)  a fixed amount of unemployment for more inflation.
D)  less unemployment for less inflation.E) A) and D)
F) C) and D)

Question 5

Which of the following statements is true? Economists generally agree that

Accepted Answer

A)  the rate of inflation in the long run is determined primarily by growth in government spending.
B)  factors other than money growth may influence the inflation rate from one year to the next, but they are not likely to cause sustained inflation.
C)  the primary cause of inflation is increases in the money supply growth that exceed growth increases in aggregate demand.
D)  the major causes of inflation are declining productivity coupled with excessive spending.E) A) and B)
F) B) and D)

Question 6

What is a reservation wage?

Accepted Answer

A)  It is the highest wage that an unemployed worker would accept, if it were offered.
B)  It is the lowest wage that an unemployed worker would accept, if it were offered.
C)  It is the highest wage that an employer will offer a potential worker if there are many candidates vying for the job.
D)  It is the lowest wage that an unemployed worker would accept, excluding any non-pecuniary benefits.E) A) and B)
F) A) and C)

Question 7

Which of the following determines the rate of inflation in the long run?
I.the rate of money growth
II.changes in expectations about the price level
III.the rate of economic growth
IV.changes in government spending

Accepted Answer

A)  I and II only
B)  I and III only
C)  I, II, and III only
D)  I, II, III, and IVE) A) and D)
F) C) and D)

Question 8

Which of the following economists came up with a theory regarding the tradeoff between
Unemployment and inflation?

Accepted Answer

A)  Almarin Phillips
B)  John Maynard Keynes
C)  Joseph Schumpeter
D)  Milton FriedmanE) B) and C)
F) B) and D)

Question 9

Rising inflation means

Accepted Answer

A)  that the price level is increasing by a given percentage rate.
B)  that the prices of all goods and services increase from year to year.
C)  that the price level is rising at an increasing rate.
D)  that the price level is rising at a variable rate.E) B) and C)
F) A) and C)

Question 10

The lowest wage that a worker would accept if offered a job is called the subsistence wage.

Accepted Answer

A) True 
 B)False

Question 11

Suppose an economy is operating with a contractionary gap.In this case, policymakers   Would seek to move the economy

Accepted Answer

A)  back down the Phillips curve, trading a reduction in inflation for an increase in unemployment.
B)  up the Phillips curve, trading a reduction in inflation for an increase in unemployment.
C)  back down the Phillips curve, trading a reduction in unemployment for an increase in inflation.
D)  up the Phillips curve, trading a reduction in unemployment for an increase in inflation.E) A) and D)
F) C) and D)

Question 12

Suppose that an economy experiences an increase in the unemployment rate and a decline in The inflation rate simultaneously.This situation would be consistent with a movement along a

Accepted Answer

A)  vertical Phillips curve.
B)  horizontal Phillips curve.
C)  positively sloped Phillips curve.
D)  negatively sloped Phillips curve.E) All of the above
F) A) and C)

Question 13

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (YP) in the long run?

Accepted Answer

A)  If %∆M > %∆ YP , then %∆P > %∆M.
B)  If %∆M > %∆ YP , then %∆P > %∆ YP.
C)  If %∆M = %∆ YP , then %∆P = 0.
D)  If %∆M = %∆ YP , then %∆P < 0.E) A) and D)
F) All of the above

Question 14

Suppose the full-employment level of real GDP is increasing at a rate of 4% per period.If policymakers are committed to keeping the long-run inflation rate at 3% per period, then what is the targeted money growth rate, assuming constant velocity?

Accepted Answer

A)  7%
B)  4%
C)  1%
D)  -1%E) C) and D)
F) A) and C)

Question 15

Each point on a Phillips curve is a different combination of

Accepted Answer

A)  aggregate output and the unemployment rate.
B)  the inflation rate and the unemployment rate.
C)  aggregate output and the inflation rate.
D)  saving and disposable income.E) A) and B)
F) C) and D)

Question 16

The relationship between inflation and unemployment suggested by the experience of the 1960s was supported by the facts of the 1970s and 1980s.

Accepted Answer

A) True 
 B)False

Question 17

Consider the following statement: "President Carter expressed concern about reports of rising inflation but insisted the economy is on the right course.He pointed to recent reductions in unemployment as evidence that his economic policies are working." Which of the following could have caused this phenomenon?

Accepted Answer

A)  Increase in government spending that shifted the aggregate demand curve to the right.
B)  Increase in money supply which lowered interest rates and shifted the short-run aggregate supply curve to the right.
C)  Economic agents revising their expectations about the price level resulting in the short-run aggregate supply curve shifting to the left.
D)  Expansionary fiscal and monetary policies that shifted the long-run aggregate supply curve to the right.E) A) and B)
F) B) and D)

Question 18

Along an actual (observed) Phillips curve,

Accepted Answer

A)  aggregate output varies inversely with the unemployment rate.
B)  aggregate output directly inversely with the inflation rate.
C)  the inflation rate varies inversely with the unemployment rate.
D)  the inflation rate varies directly with the unemployment rate.E) A) and B)
F) A) and C)

Question 19

In the three phases of the inflation-unemployment cycle, during the Phillips phase,

Accepted Answer

A)  inflation and unemployment both increase.
B)  inflation and unemployment stay the same.
C)  inflation and unemployment both decrease.
D)  unemployment decreases and inflation increases.E) C) and D)
F) B) and D)

Question 20

Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a 3% rate.Using the equation of exchange, what is the value of the long-run inflation rate, assuming constant velocity?

Accepted Answer

A)  6%
B)  3%
C)  1%
D)  0E) A) and B)
F) A) and D)

Exam 31: Macro Inflation and Unemployment

Suppose that an economy experiences an increase in the unemployment rate and a decline in The inflation rate simultaneously.This situation would be consistent with a movement along a

Correct Answer
verified

Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a 3% rate.Using the equation of exchange, what is the value of the long-run inflation rate, assuming constant velocity?

Correct Answer
verified

A decrease in the money supply will shift the AD curve to the left.

Correct Answer
verified

Along an actual (observed) Phillips curve,

Correct Answer
verified

Each point on a Phillips curve is a different combination of

Correct Answer
verified

Suppose the full-employment level of real GDP is increasing at a rate of 4% per period.If policymakers are committed to keeping the long-run inflation rate at 3% per period, then what is the targeted money growth rate, assuming constant velocity?

Correct Answer
verified

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (Y_P) in the long run?

Correct Answer
verified

The lowest wage that a worker would accept if offered a job is called the subsistence wage.

Correct Answer
verified

Figure 16-1 -Refer to Figure 16-1.Consider point A where inflation is relatively high and unemployment Is relatively low.In order to move down the curve toward point B, what fiscal policy measures should the policymakers undertake?

Correct Answer
verified

Suppose an economy is operating with a contractionary gap.In this case, policymakers Would seek to move the economy

Correct Answer
verified

Rising inflation means

Correct Answer
verified

Which of the following statements is true? Economists generally agree that

Correct Answer
verified

Figure 16-1 -Refer to Figure 16-1.Moving from B to A shows a tradeoff of

Correct Answer
verified

Correct Answer
verified

Which of the following economists came up with a theory regarding the tradeoff between Unemployment and inflation?

Correct Answer
verified

What is a reservation wage?

Correct Answer
verified

The relationship between inflation and unemployment suggested by the experience of the 1960s was supported by the facts of the 1970s and 1980s.

Correct Answer
verified

Which of the following determines the rate of inflation in the long run? I.the rate of money growth II.changes in expectations about the price level III.the rate of economic growth IV.changes in government spending

Correct Answer
verified

In the three phases of the inflation-unemployment cycle, during the Phillips phase,

Correct Answer
verified

Figure 16-5 -Refer to Figure 16-5.The shifts of aggregate demand from points a to b to c to d are Characteristic of which phase(s) of the inflation-unemployment cycle?

Correct Answer
verified

Exam 31: Macro Inflation and Unemployment

Suppose that an economy experiences an increase in the unemployment rate and a decline in The inflation rate simultaneously.This situation would be consistent with a movement along a

Correct AnswerverifiedShow Answer

Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a 3% rate.Using the equation of exchange, what is the value of the long-run inflation rate, assuming constant velocity?

Correct AnswerverifiedShow Answer

A decrease in the money supply will shift the AD curve to the left.

Correct AnswerverifiedShow Answer

Along an actual (observed) Phillips curve,

Correct AnswerverifiedShow Answer

Each point on a Phillips curve is a different combination of

Correct AnswerverifiedShow Answer

Suppose the full-employment level of real GDP is increasing at a rate of 4% per period.If policymakers are committed to keeping the long-run inflation rate at 3% per period, then what is the targeted money growth rate, assuming constant velocity?

Correct AnswerverifiedShow Answer

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (YP) in the long run?

Correct AnswerverifiedShow Answer

The lowest wage that a worker would accept if offered a job is called the subsistence wage.

Correct AnswerverifiedShow Answer

Figure 16-1 -Refer to Figure 16-1.Consider point A where inflation is relatively high and unemployment Is relatively low.In order to move down the curve toward point B, what fiscal policy measures should the policymakers undertake?

Correct AnswerverifiedShow Answer

Suppose an economy is operating with a contractionary gap.In this case, policymakers Would seek to move the economy

Correct AnswerverifiedShow Answer

Rising inflation means

Correct AnswerverifiedShow Answer

Which of the following statements is true? Economists generally agree that

Correct AnswerverifiedShow Answer

Figure 16-1 -Refer to Figure 16-1.Moving from B to A shows a tradeoff of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following economists came up with a theory regarding the tradeoff between Unemployment and inflation?

Correct AnswerverifiedShow Answer

What is a reservation wage?

Correct AnswerverifiedShow Answer

The relationship between inflation and unemployment suggested by the experience of the 1960s was supported by the facts of the 1970s and 1980s.

Correct AnswerverifiedShow Answer

Which of the following determines the rate of inflation in the long run? I.the rate of money growth II.changes in expectations about the price level III.the rate of economic growth IV.changes in government spending

Correct AnswerverifiedShow Answer

In the three phases of the inflation-unemployment cycle, during the Phillips phase,

Correct AnswerverifiedShow Answer

Figure 16-5 -Refer to Figure 16-5.The shifts of aggregate demand from points a to b to c to d are Characteristic of which phase(s) of the inflation-unemployment cycle?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (Y_P) in the long run?

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