Question 1

In the short run,policy that changes aggregate demand changes

Accepted Answer

A)   both unemployment and the price level.
B)   neither unemployment nor the price level.
C)   only unemployment.
D)   only the price level.E) A) and D)
F) B) and C)

Question 2

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

Question 3

If a central bank decreases the money supply in response to an adverse supply shock,then which of the following quantities moves closer to its pre-shock value as a result?

Accepted Answer

A)   both the price level and output
B)   the price level but not output
C)   output but not the price level
D)   neither output nor the price levelE) B) and C)
F) A) and D)

Question 4

The sacrifice ratio of the Volcker disinflation was larger than previous estimates had predicted.

Accepted Answer

A) True 
 B)False

Question 5

Other things the same,if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

Accepted Answer

A) True 
 B)False

Question 6

In the Friedman-Phelps analysis,when inflation is less than expected,the unemployment rate is less than the natural rate.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)   inflation will be higher.
B)   unemployment will be lower.
C)   real GDP will be higher.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 8

There is an adverse supply shock.In response the Federal Reserve pursues an expansionary monetary policy.Taking into account both the shock and the Federal Reserve's policy,which of the following are we sure of?

Accepted Answer

A)   unemployment will be higher
B)   unemployment will be lower
C)   inflation will be higher
D)   inflation will be lowerE) B) and C)
F) A) and D)

Question 9

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

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

Question 10

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) B) and D)
F) None of the above

Question 11

Figure 22-6
Use the two graphs in the diagram to answer the following questions.

-Refer to Figure 22-6.The economy would move from 3 to 5

Accepted Answer

A)   in the short run if money supply growth increased unexpectedly.
B)   in the short run if money supply growth decreased unexpectedly.
C)   in the long run if money supply growth increases.
D)   in the long run if money supply growth decreases.E) A) and B)
F) B) and C)

Question 12

Suppose expected inflation and actual inflation are both low,and unemployment is at its natural rate.If the Fed then pursues an expansionary monetary policy,which of the following results would be expected in the short run?

Accepted Answer

A)   The short-run Phillips curve would shift to the left.
B)   The short-run Phillips curve would shift to the right.
C)   The economy would move up and to the left along a given short-run Phillips curve.
D)   The economy would move down and to the right along a given short-run Phillips curve.E) B) and D)
F) None of the above

Question 13

If a central bank attempts to lower the inflation rate but the public doesn't believe the inflation rate will fall as far as the central bank says,then in the short run unemployment

Accepted Answer

A)   rises.As inflation expectations adjust,the short-run Phillips curve shifts right.
B)   rises.As inflation expectations adjust,the short-run Phillips curve shifts left.
C)   falls.As inflation expectations adjust,the short-run Phillips curve shifts right.
D)   falls.As inflation expectations adjust,the short-run Phillips curve shifts left.E) A) and B)
F) A) and C)

Question 14

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 15

If people believe that the central bank is going to reduce inflation

Accepted Answer

A)   the short-run Phillips curve shifts right and the sacrifice ratio will rise.
B)   the short-run Phillips curve shifts right and the sacrifice ratio will fall.
C)   the short-run Phillips curve shifts left and the sacrifice ratio will rise.
D)   the short-run Phillips curve shifts left and the sacrifice ratio will fall.E) All of the above
F) B) and C)

Question 16

According to the Phillips curve diagram,if a central bank disinflates what ultimately happens to the unemployment rate?

Accepted Answer

It returns...

Question 17

Suppose,as in the 1970's in the U.S. ,that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force.Would this have any effect on the long-run Phillips curve?

Accepted Answer

Since this would raise the nat...

Question 18

Which of the following models imply that a decrease in the money supply reduces unemployment temporarily but not permanently?

Accepted Answer

A)   both the long-run Phillips curve and the aggregate supply and aggregate demand model.
B)   the aggregate demand and aggregate supply model,but not the long-run Phillips curve.
C)   the long-run Phillips curve,but not the aggregate demand and aggregate supply model.
D)   neither the long-run Phillips curve nor the aggregate supply and aggregate demand model.E) A) and B)
F) A) and C)

Question 19

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 20

By raising aggregate demand more than anticipated,policymakers

Accepted Answer

A)   reduce unemployment for awhile.
B)   raise unemployment for awhile.
C)   reduce unemployment permanently.
D)   None of the above is correct.E) C) and D)
F) A) and C)

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

If people believe that the central bank is going to reduce inflation

Correct Answer
verified

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

Correct Answer
verified

Suppose,as in the 1970's in the U.S. ,that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force.Would this have any effect on the long-run Phillips curve?

Correct Answer
verified
Since this would raise the nat...
View 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 Answer
verified

Correct Answer
verified

The sacrifice ratio of the Volcker disinflation was larger than previous estimates had predicted.

Correct Answer
verified

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

Correct Answer
verified

By raising aggregate demand more than anticipated,policymakers

Correct Answer
verified

Which of the following models imply that a decrease in the money supply reduces unemployment temporarily but not permanently?

Correct Answer
verified

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

Correct Answer
verified

According to the Phillips curve diagram,if a central bank disinflates what ultimately happens to the unemployment rate?

Correct Answer
verified
It returns...
View Answer

In the short run,policy that changes aggregate demand changes

Correct Answer
verified

If a central bank attempts to lower the inflation rate but the public doesn't believe the inflation rate will fall as far as the central bank says,then in the short run unemployment

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

Suppose expected inflation and actual inflation are both low,and unemployment is at its natural rate.If the Fed then pursues an expansionary monetary policy,which of the following results would be expected in the short run?

Correct Answer
verified

Other things the same,if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

Correct Answer
verified

In the Friedman-Phelps analysis,when inflation is less than expected,the unemployment rate is less than the natural rate.

Correct Answer
verified

Figure 22-6 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 22-6.The economy would move from 3 to 5

Correct Answer
verified

There is an adverse supply shock.In response the Federal Reserve pursues an expansionary monetary policy.Taking into account both the shock and the Federal Reserve's policy,which of the following are we sure of?

Correct Answer
verified

If a central bank decreases the money supply in response to an adverse supply shock,then which of the following quantities moves closer to its pre-shock value as a result?

Correct Answer
verified

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

If people believe that the central bank is going to reduce inflation

Correct AnswerverifiedShow Answer

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

Correct AnswerverifiedShow Answer

Suppose,as in the 1970's in the U.S. ,that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force.Would this have any effect on the long-run Phillips curve?

Correct AnswerverifiedSince this would raise the nat...View AnswerShow 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

Correct AnswerverifiedShow Answer

The sacrifice ratio of the Volcker disinflation was larger than previous estimates had predicted.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

By raising aggregate demand more than anticipated,policymakers

Correct AnswerverifiedShow Answer

Which of the following models imply that a decrease in the money supply reduces unemployment temporarily but not permanently?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to the Phillips curve diagram,if a central bank disinflates what ultimately happens to the unemployment rate?

Correct AnswerverifiedIt returns...View AnswerShow Answer

In the short run,policy that changes aggregate demand changes

Correct AnswerverifiedShow Answer

If a central bank attempts to lower the inflation rate but the public doesn't believe the inflation rate will fall as far as the central bank says,then in the short run unemployment

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

Suppose expected inflation and actual inflation are both low,and unemployment is at its natural rate.If the Fed then pursues an expansionary monetary policy,which of the following results would be expected in the short run?

Correct AnswerverifiedShow Answer

Other things the same,if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

Correct AnswerverifiedShow Answer

In the Friedman-Phelps analysis,when inflation is less than expected,the unemployment rate is less than the natural rate.

Correct AnswerverifiedShow Answer

Figure 22-6 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 22-6.The economy would move from 3 to 5

Correct AnswerverifiedShow Answer

There is an adverse supply shock.In response the Federal Reserve pursues an expansionary monetary policy.Taking into account both the shock and the Federal Reserve's policy,which of the following are we sure of?

Correct AnswerverifiedShow Answer

If a central bank decreases the money supply in response to an adverse supply shock,then which of the following quantities moves closer to its pre-shock value as a result?

Correct AnswerverifiedShow Answer

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Since this would raise the nat...
View Answer

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It returns...
View Answer

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