Question 1

Which of the following characterizes the relationship between inflation and unemployment in the United States?
I.There have been periods in which a clear tradeoff between inflation and unemployment
Seem to exist.
II.There have been periods in which inflation and unemployment rose together.
III.There have been periods in which inflation and unemployment fell together.

Accepted Answer

A)  I, II, and III
B)  I and II
C)  I and III
D)  I onlyE) A) and D)
F) A) and C)

Question 2

The notion that there is a tradeoff between inflation and unemployment is expressed as a

Accepted Answer

A)  Phillips curve.
B)  Keynes curve.
C)  Schumpeter curve.
D)  Friedman curve.E) None of the above
F) A) and D)

Question 3

In the long run, monetary growth

Accepted Answer

A)  can change the unemployment rate only at the cost of increased inflation.
B)  can change the unemployment rate while holding the inflation rate constant.
C)  can promote economic growth.
D)  cannot affect the factors that determine the economy's unemployment rate.E) A) and D)
F) B) and D)

Question 4

In the 1960s and early 70s, economists believed that the Phillips curve indicated that policymakers could choose the mix of inflation and unemployment they were willing to accept and achieved this with appropriate fiscal and monetary policies.

Accepted Answer

A) True 
 B)False

Question 5

The Phillips phase of the inflation-unemployment cycle occurs when both inflation and unemployment increase.

Accepted Answer

A) True 
 B)False

Question 6

The recovery phase of the inflation-unemployment cycle is explained by

Accepted Answer

A)  rightward shifts of the short-run aggregate supply curve in response to expansionary policies.
B)  rightward shifts of the aggregate demand curve in response to expansionary policies.
C)  leftward shifts of the short-run aggregate supply curve in response to higher prices.
D)  leftward shifts of the aggregate demand curve in response to higher prices.E) B) and D)
F) None of the above

Question 7

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Which of the following could have caused this phenomenon?

Accepted Answer

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

Question 8

Structural unemployment is best reduced by

Accepted Answer

A)  job training programs to retool workers with new skills.
B)  improved job-market information.
C)  an increasing unemployment compensation benefits.
D)  offering above equilibrium wages to attract workers.E) B) and D)
F) A) and C)

Question 9

Figure 16-7
 
-Refer to Figure 16-7.At point 4, if policymakers are concerned about economic performance, they will most likely respond by

Accepted Answer

A)  increasing government purchases and the money supply.
B)  increasing taxes.
C)  decreasing aggregate demand.
D)  having the Fed sell bonds.E) None of the above
F) A) and D)

Question 10

The Phillips phase of the inflation-unemployment cycle drives the price level

Accepted Answer

A)  below what workers and firms expected causing nominal wages to fall below their expected level.
B)  below what workers and firms expected causing real wages to rise above their expected level.
C)  above what workers and firms expected causing nominal wages to rise above their expected level.
D)  above what workers and firms expected causing real wages to fall below their expected level.E) A) and D)
F) B) and D)

Question 11

If workers and firms adjust their expectations of future prices in a higher price level, the short-run aggregate supply curve shifts to the right.

Accepted Answer

A) True 
 B)False

Question 12

Figure 16-7
 1 to SRAS2 Because of A) rising output prices. B) economic agents adjust their expectations regarding prices and wages downwards. C) a fall in nominal wages. D) economic agents adjust their expectations regarding prices and wages upwards." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 16-7.Over time, the aggregate supply curve shifts from SRAS1 to SRAS2 Because of

Accepted Answer

A)  rising output prices.
B)  economic agents adjust their expectations regarding prices and wages downwards.
C)  a fall in nominal wages.
D)  economic agents adjust their expectations regarding prices and wages upwards.E) B) and C)
F) A) and D)

Question 13

The efficiency-wage theory holds that self-correction in an economy will not automatically eliminate a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 14

In the short run and in the long run, there is a tradeoff between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 15

The notion that there is a tradeoff between inflation and unemployment is expressed as an efficiency wage curve.

Accepted Answer

A) True 
 B)False

Question 16

Figure 16-3
 
-Refer to Figure 16-3.Which of the following movements represents the recovery phase?

Accepted Answer

A)  the movement from A to B
B)  the movement from B to C
C)  the movement from C to D
D)  the movement from C to BE) A) and B)
F) A) and C)

Question 17

Frictional unemployment exists because

Accepted Answer

A)  the quantity demanded of labor exceeds the quantity supplied at the equilibrium wage rate.
B)  of fluctuations in economic activity.
C)  technological changes make the skills of the workers incompatible with the skills used on the job.
D)  it takes time for people seeking jobs and employers seeking workers to find each other.E) A) and D)
F) C) and D)

Question 18

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation means That the price level is

Accepted Answer

A)  falling.
B)  falling at an increasing rate.
C)  rising by smaller and smaller percentages.
D)  falling at a constant rate.E) A) and B)
F) A) and C)

Question 19

Evidence suggests that all countries with very high _______ also have very high _______.

Accepted Answer

A)  inflation rates; money growth rates
B)  unemployment rates; GDP growth rates
C)  GDP growth rates; government budget deficits
D)  government budget deficits; inflation ratesE) A) and C)
F) None of the above

Question 20

The recovery phase of the inflation-unemployment cycle emerges if

Accepted Answer

A)  prices and wages are flexible.
B)  nominal wages and prices rise.
C)  resource prices are higher.
D)  policymakers respond to a recessionary gap by increasing aggregate demand.E) B) and C)
F) None of the above

Exam 31: Macro Inflation and Unemployment

The recovery phase of the inflation-unemployment cycle emerges if

Correct Answer
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The Phillips phase of the inflation-unemployment cycle drives the price level

Correct Answer
verified

The Phillips phase of the inflation-unemployment cycle occurs when both inflation and unemployment increase.

Correct Answer
verified

Evidence suggests that all countries with very high _ also have very high _.

Correct Answer
verified

In the long run, monetary growth

Correct Answer
verified

The notion that there is a tradeoff between inflation and unemployment is expressed as an efficiency wage curve.

Correct Answer
verified

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Which of the following could have caused this phenomenon?

Correct Answer
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Figure 16-3 -Refer to Figure 16-3.Which of the following movements represents the recovery phase?

Correct Answer
verified

In the short run and in the long run, there is a tradeoff between inflation and unemployment.

Correct Answer
verified

Figure 16-7 -Refer to Figure 16-7.Over time, the aggregate supply curve shifts from SRAS₁ to SRAS₂ Because of

Correct Answer
verified

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation means That the price level is

Correct Answer
verified

Structural unemployment is best reduced by

Correct Answer
verified

Frictional unemployment exists because

Correct Answer
verified

If workers and firms adjust their expectations of future prices in a higher price level, the short-run aggregate supply curve shifts to the right.

Correct Answer
verified

Correct Answer
verified

In the 1960s and early 70s, economists believed that the Phillips curve indicated that policymakers could choose the mix of inflation and unemployment they were willing to accept and achieved this with appropriate fiscal and monetary policies.

Correct Answer
verified

The recovery phase of the inflation-unemployment cycle is explained by

Correct Answer
verified

Figure 16-7 -Refer to Figure 16-7.At point 4, if policymakers are concerned about economic performance, they will most likely respond by

Correct Answer
verified

The notion that there is a tradeoff between inflation and unemployment is expressed as a

Correct Answer
verified

The efficiency-wage theory holds that self-correction in an economy will not automatically eliminate a recessionary gap.

Correct Answer
verified

Exam 31: Macro Inflation and Unemployment

The recovery phase of the inflation-unemployment cycle emerges if

Correct AnswerverifiedShow Answer

The Phillips phase of the inflation-unemployment cycle drives the price level

Correct AnswerverifiedShow Answer

The Phillips phase of the inflation-unemployment cycle occurs when both inflation and unemployment increase.

Correct AnswerverifiedShow Answer

Evidence suggests that all countries with very high _______ also have very high _______.

Correct AnswerverifiedShow Answer

In the long run, monetary growth

Correct AnswerverifiedShow Answer

The notion that there is a tradeoff between inflation and unemployment is expressed as an efficiency wage curve.

Correct AnswerverifiedShow Answer

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Which of the following could have caused this phenomenon?

Correct AnswerverifiedShow Answer

Figure 16-3 -Refer to Figure 16-3.Which of the following movements represents the recovery phase?

Correct AnswerverifiedShow Answer

In the short run and in the long run, there is a tradeoff between inflation and unemployment.

Correct AnswerverifiedShow Answer

Figure 16-7 -Refer to Figure 16-7.Over time, the aggregate supply curve shifts from SRAS1 to SRAS2 Because of

Correct AnswerverifiedShow Answer

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation means That the price level is

Correct AnswerverifiedShow Answer

Structural unemployment is best reduced by

Correct AnswerverifiedShow Answer

Frictional unemployment exists because

Correct AnswerverifiedShow Answer

If workers and firms adjust their expectations of future prices in a higher price level, the short-run aggregate supply curve shifts to the right.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the 1960s and early 70s, economists believed that the Phillips curve indicated that policymakers could choose the mix of inflation and unemployment they were willing to accept and achieved this with appropriate fiscal and monetary policies.

Correct AnswerverifiedShow Answer

The recovery phase of the inflation-unemployment cycle is explained by

Correct AnswerverifiedShow Answer

Figure 16-7 -Refer to Figure 16-7.At point 4, if policymakers are concerned about economic performance, they will most likely respond by

Correct AnswerverifiedShow Answer

The notion that there is a tradeoff between inflation and unemployment is expressed as a

Correct AnswerverifiedShow Answer

The efficiency-wage theory holds that self-correction in an economy will not automatically eliminate a recessionary gap.

Correct AnswerverifiedShow Answer

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Evidence suggests that all countries with very high _ also have very high _.

Correct Answer
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Figure 16-7 -Refer to Figure 16-7.Over time, the aggregate supply curve shifts from SRAS₁ to SRAS₂ Because of

Correct Answer
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