Question 1

For many years country A has had a lower unemployment rate than country B.According to the long-run Phillips curve which of the following could explain this?
Country A has

Accepted Answer

A)  maintained a higher money supply growth rate.
B)  maintained a lower money supply growth rate.
C)  a higher minimum wage than country B.
D)  a lower minimum wage than country B.E) A) and D)
F) A) and B)

Question 2

The idea that the long-run Phillips curve is

Accepted Answer

A)  vertical stems from the analysis of Samuelson and Solow.
B)  vertical stems from the analysis of Friedman and Phelps.
C)  vertical was disproved by the experiment that monetary and fiscal policymakers inadvertently created in the 1970s.
D)  downward-sloping can be correct if unemployment responds very quickly to unexpected inflation.E) A) and D)
F) C) and D) B

Question 3

In the nineteenth century,some countries were on a gold standard so that on average the money supply growth rate was close to zero and expected inflation was more or less constant.For these countries during this time period,we find that increases in actual inflation were generally associated with falling unemployment.These findings

Accepted Answer

A)  are consistent with Friedman and Phelps's theories,because they argued that when inflation was higher than expected,unemployment would fall.
B)  are consistent with Friedman and Phelps's theories,because they argued that when prices rose unemployment would fall whether actual inflation was higher than expected or not.
C)  are inconsistent with Friedman and Phelps's theories,because they argued that higher inflation would increase unemployment.
D)  are inconsistent with Friedman and Phelps's theories,because they argued that inflation and unemployment are unrelated.E) A) and D)
F) A) and C)

Question 4

Figure 36-8.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." 1 to PC2,the curve will soon shift back to PC1 if people perceive the A) increase in the inflation rate as a temporary aberration. B) economic boom as a temporary aberration. C) increase in the inflation rate as a sign of a new era of higher inflation. D) economic boom as a sign of a new era of higher economic growth." class="answers-bank-image d-inline" rel="preload" > 1 to PC2,the curve will soon shift back to PC1 if people perceive the A) increase in the inflation rate as a temporary aberration. B) economic boom as a temporary aberration. C) increase in the inflation rate as a sign of a new era of higher inflation. D) economic boom as a sign of a new era of higher economic growth." class="answers-bank-image d-inline" rel="preload" >

-Refer to Figure 36-8.Subsequent to the shift of the Phillips curve from PC1 to PC2,the curve will soon shift back to PC1 if people perceive the

Accepted Answer

A)  increase in the inflation rate as a temporary aberration.
B)  economic boom as a temporary aberration.
C)  increase in the inflation rate as a sign of a new era of higher inflation.
D)  economic boom as a sign of a new era of higher economic growth.E) None of the above
F) C) and D)

Question 5

A low sacrifice ratio would make a central bank less willing to reduce the inflation rate.

Accepted Answer

A) True 
 B)False

Question 6

An increase in the inflation rate permanently reduces the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 7

A policy that raised the natural rate of unemployment would shift

Accepted Answer

A)  both the short-run and the long-run Phillips curves to the right.
B)  the short-run Phillips curve right but leave the long-run Phillips curve unchanged.
C)  the long-run Phillips curve right but leave the short-run Phillips curve unchanged.
D)  neither the long-run Phillips curve nor the short-run Phillips curve right.E) A) and C)
F) B) and C)

Question 8

The theory by which people optimally use all available information when forecasting the future is known as

Accepted Answer

A)  rational expectations.
B)  perfect expectations.
C)  credible expectations.
D)  Predictive expectations.E) All of the above
F) None of the above

Question 9

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) C) and D)
F) A) and C)

Question 10

In the long run,an increase in the money supply

Accepted Answer

A)  leaves prices and unemployment unchanged.
B)  raises prices and unemployment.
C)  raises prices and leaves unemployment unchanged.
D)  leaves prices unchanged and reduces unemployment.E) All of the above
F) B) and C)

Question 11

According to Friedman and Phelps,the unemployment rate

Accepted Answer

A)  is never below its natural rate.
B)  is below its natural rate when actual inflation is greater than expected inflation.
C)  is below its natural rate when actual inflation is less than expected inflation.
D)  is below its natural rate when actual inflation equals expected inflation.E) A) and C)
F) None of the above B

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

In his famous article published in an economics journal in 1958,a.W.Phillips

Accepted Answer

A)  used data for the United States to show a negative relationship between the rate of change of the U.S.consumer price index and the U.S.unemployment rate.
B)  used data for the United States to show a negative relationship between the rate of change of wages in the U.S.and the U.S.unemployment rate.
C)  used data for the United Kingdom to show a negative relationship between the rate of change of the U.K.consumer price index and the U.K.unemployment rate.
D)  used data for the United Kingdom to show a negative relationship between the rate of change of wages in the U.K.and the U.K.unemployment rate.E) All of the above
F) None of the above

Question 14

A central bank announces it will decrease the inflation rate by 10 percentage points.People are skeptical of the announcement,but do expect the central bank will reduce inflation by 5 percentage points and so expected inflation falls by 5 percentage points.If the central bank decreases inflation by only 3 percentage points then the unemployment rate will fall.

Accepted Answer

A) True 
 B)False  True

Question 15

Disinflation would eventually cause

Accepted Answer

A)  the short-run and the long run Phillips curve to shift right.
B)  the short-run and the long run Phillips curve to shift left.
C)  the short-run Phillips curve but not the long run Phillips curve to shift right.
D)  the short-run Phillips curve but not the long run Phillips curve to shift left.E) A) and C)
F) All of the above

Question 16

Which of the following would cause the price level to fall and output to rise in the short run?

Accepted Answer

A)  an increase in the money supply
B)  a decrease in the money supply
C)  an adverse supply shock
D)  a favorable supply shockE) A) and B)
F) B) and C)

Question 17

Disinflation is defined as a

Accepted Answer

A)  zero rate of inflation.
B)  constant rate of inflation.
C)  reduction in the rate of inflation.
D)  negative rate of inflation.E) B) and C)
F) C) and D)

Question 18

If a government redesigned its unemployment insurance programs so that the unemployed had greater incentives to quickly find appropriate jobs,then which of the following curves would shift right?

Accepted Answer

A)  the long-run Phillips curve and the long-run aggregate supply curve
B)  the long-run Phillips curve but not the long-run aggregate supply curve
C)  the long-run aggregate supply curve but not the long-run Phillips curve
D)  neither the long-run Phillips curve nor the long-run aggregate supply curveE) A) and C)
F) B) and D)

Question 19

If policymakers accommodate an adverse supply shock,then in the short run the unemployment rate

Accepted Answer

A)  and the inflation rate rise.
B)  and the inflation rate fall.
C)  rises and the inflation rate falls.
D)  falls and the inflation rate rises.E) B) and C)
F) A) and D)

Question 20

Other things the same,a decrease in aggregate demand decreases both inflation and unemployment.

Accepted Answer

A) True 
 B)False

Exam 36: The Short-Run Trade-Off Between Inflation and Unemployment

For many years country A has had a lower unemployment rate than country B.According to the long-run Phillips curve which of the following could explain this? Country A has

Correct Answer
verified

The idea that the long-run Phillips curve is

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

A low sacrifice ratio would make a central bank less willing to reduce the inflation rate.

Correct Answer
verified

An increase in the inflation rate permanently reduces the natural rate of unemployment.

Correct Answer
verified

A policy that raised the natural rate of unemployment would shift

Correct Answer
verified

The theory by which people optimally use all available information when forecasting the future is known as

Correct Answer
verified

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

Correct Answer
verified

In the long run,an increase in the money supply

Correct Answer
verified

According to Friedman and Phelps,the unemployment rate

Correct Answer
verified
B

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

Correct Answer
verified

In his famous article published in an economics journal in 1958,a.W.Phillips

Correct Answer
verified

Correct Answer
verified
True

Disinflation would eventually cause

Correct Answer
verified

Which of the following would cause the price level to fall and output to rise in the short run?

Correct Answer
verified

Disinflation is defined as a

Correct Answer
verified

If a government redesigned its unemployment insurance programs so that the unemployed had greater incentives to quickly find appropriate jobs,then which of the following curves would shift right?

Correct Answer
verified

If policymakers accommodate an adverse supply shock,then in the short run the unemployment rate

Correct Answer
verified

Other things the same,a decrease in aggregate demand decreases both inflation and unemployment.

Correct Answer
verified

Exam 36: The Short-Run Trade-Off Between Inflation and Unemployment

For many years country A has had a lower unemployment rate than country B.According to the long-run Phillips curve which of the following could explain this? Country A has

Correct AnswerverifiedShow Answer

The idea that the long-run Phillips curve is

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A low sacrifice ratio would make a central bank less willing to reduce the inflation rate.

Correct AnswerverifiedShow Answer

An increase in the inflation rate permanently reduces the natural rate of unemployment.

Correct AnswerverifiedShow Answer

A policy that raised the natural rate of unemployment would shift

Correct AnswerverifiedShow Answer

The theory by which people optimally use all available information when forecasting the future is known as

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the long run,an increase in the money supply

Correct AnswerverifiedShow Answer

According to Friedman and Phelps,the unemployment rate

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

In his famous article published in an economics journal in 1958,a.W.Phillips

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTrue

Disinflation would eventually cause

Correct AnswerverifiedShow Answer

Which of the following would cause the price level to fall and output to rise in the short run?

Correct AnswerverifiedShow Answer

Disinflation is defined as a

Correct AnswerverifiedShow Answer

If a government redesigned its unemployment insurance programs so that the unemployed had greater incentives to quickly find appropriate jobs,then which of the following curves would shift right?

Correct AnswerverifiedShow Answer

If policymakers accommodate an adverse supply shock,then in the short run the unemployment rate

Correct AnswerverifiedShow Answer

Other things the same,a decrease in aggregate demand decreases both inflation and unemployment.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
B

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
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified