Question 1

The short-run Phillips curve is _______ and the long-run Phillips curve is _______.

Accepted Answer

A)   downward sloping; vertical
B)   downward sloping; horizontal
C)   upward sloping; vertical
D)   upward sloping; horizontalE) B) and C)
F) A) and C) A

Question 2

The graph shown displays various price and output levels in an economy. 1, it must be in: A)  long-run equilibrium. B)  a recession. C)  an economic boom. D)  an economic recovery." class="answers-bank-image d-inline" rel="preload" > If the economy is currently at point E1, it must be in:

Accepted Answer

A)   long-run equilibrium.
B)   a recession.
C)   an economic boom.
D)   an economic recovery.E) None of the above
F) A) and D)

Question 3

Deflation:

Accepted Answer

A)   reduces the level of aggregate demand in the economy.
B)   increases the level of aggregate demand in the economy.
C)   does not affect the level of aggregate demand in the economy.
D)   reduces the level of aggregate supply in the economy.E) C) and D)
F) B) and D)

Question 4

Neutrality of money is the idea that:

Accepted Answer

A)   changes in aggregate price levels do not affect real outcomes in the economy.
B)   monetary policy conducted by the Fed has no real impact on the economy.
C)   it makes no difference who is spending each dollar in real terms.
D)   there is no difference between fiscal and monetary policy as long as the same amount of money is injected into the economy.E) All of the above
F) C) and D)

Question 5

Most economists agree that stable economies generate inflation of around:

Accepted Answer

A)   ten percent.
B)   two to three percent.
C)   five to six percent.
D)   seven percent.E) A) and B)
F) A) and C)

Question 6

Headline inflation is:

Accepted Answer

A)   core inflation plus the prices of food and energy.
B)   core inflation seasonally adjusted.
C)   the change in prices of inputs used by Fortune 500 companies.
D)   core inflation minus the price of inputs.E) A) and B)
F) A) and C) A

Question 7

If the real value of your savings decreases over time:

Accepted Answer

A)   the real rate of interest is positive.
B)   inflation is zero.
C)   the real rate of interest is negative.
D)   the real rate of interest is zero.E) B) and D)
F) A) and B)

Question 8

What is the quantity equation?

Accepted Answer

A)   M × V = P × Y
B)   M × P = Y × V
C)   P × V = M × Y
D)   M × Y = P × VE) B) and C)
F) None of the above

Question 9

A temporary change in the price level caused by changes in the business cycle is known as:

Accepted Answer

A)   demand-pull inflation.
B)   cost-push inflation.
C)   demand-push inflation.
D)   cost-pull inflation.E) A) and B)
F) A) and C)

Question 10

Core inflation:

Accepted Answer

A)   excludes goods with historically volatile price changes.
B)   is the overall rise in prices in the economy.
C)   excludes durable goods.
D)   is not regularly tracked by the BLS.E) B) and D)
F) A) and B)

Question 11

If the nominal interest rate is the same as the real interest rate, then inflation must be:

Accepted Answer

A)   zero.
B)   higher than the nominal rate of interest.
C)   lower than the nominal rate of interest.
D)   negative.E) A) and D)
F) C) and D)

Question 12

The money, time, and opportunity used to change prices to keep pace with inflation are called:

Accepted Answer

A)   menu costs.
B)   shoe-leather costs.
C)   tax distortions.
D)   the velocity of inflation.E) A) and C)
F) A) and D)

Question 13

If unemployment is below the NAIRU, inflation generally:

Accepted Answer

A)   accelerates.
B)   decelerates.
C)   becomes negative.
D)   gets caught in a downward spiral.E) A) and B)
F) A) and C)

Question 14

Brian is paid monthly via a direct deposit into an interest-bearing checking account. He withdraws $500 of this pay in cash at the beginning of the month to spend throughout it. However, due to recent inflation, Brian decides to instead withdraw $125 from the bank every week, so that his money can earn interest for as long as possible. The time and energy Brian spends visiting the bank more often would be classified as a:

Accepted Answer

A)   shoe-leather cost.
B)   menu cost.
C)   transactions cost.
D)   tax distortion.E) B) and C)
F) C) and D)

Question 15

The table shown provides CPI values for various years.  What was the inflation rate in 2016?

Accepted Answer

A)   2.9 percent
B)   −1.9 percent
C)   1.9 percent
D)   4 percentE) A) and D)
F) B) and C)

Question 16

Which measure of inflation best reflects changing prices for the average consumer?

Accepted Answer

A)   Headline inflation
B)   Core inflation
C)   The Producer Price Index
D)   The GDP deflatorE) A) and D)
F) C) and D) A

Question 17

The graph shown displays various price and output levels in an economy. 3, it must be in: A)  long-run equilibrium. B)  a recession. C)  an economic expansion. D)  an economic recovery." class="answers-bank-image d-inline" rel="preload" > If the economy is currently at point E3, it must be in:

Accepted Answer

A)   long-run equilibrium.
B)   a recession.
C)   an economic expansion.
D)   an economic recovery.E) C) and D)
F) All of the above

Question 18

The graph shown displays various price and output levels in an economy.  What does the "P" on the y-axis stand for?

Accepted Answer

A)   Average price level
B)   Inflation rate
C)   Price of GDP
D)   Price of YE) A) and C)
F) B) and C)

Question 19

Deflation is:

Accepted Answer

A)   a sustained rise in the aggregate price level.
B)   negative inflation.
C)   as common as inflation.
D)   a decline in inflation.E) B) and C)
F) A) and D)

Question 20

If an economy produces 1,000 units of output when the price level is $5 and the money supply is $1,000, what is the velocity of money?

Accepted Answer

A)   5
B)   200
C)   50
D)   2E) B) and C)
F) C) and D)

Exam 16: Inflation

The short-run Phillips curve is _ and the long-run Phillips curve is _.

Correct Answer
verified
A

The graph shown displays various price and output levels in an economy. If the economy is currently at point E₁, it must be in:

Correct Answer
verified

Deflation:

Correct Answer
verified

Neutrality of money is the idea that:

Correct Answer
verified

Most economists agree that stable economies generate inflation of around:

Correct Answer
verified

Headline inflation is:

Correct Answer
verified
A

If the real value of your savings decreases over time:

Correct Answer
verified

What is the quantity equation?

Correct Answer
verified

A temporary change in the price level caused by changes in the business cycle is known as:

Correct Answer
verified

Core inflation:

Correct Answer
verified

If the nominal interest rate is the same as the real interest rate, then inflation must be:

Correct Answer
verified

The money, time, and opportunity used to change prices to keep pace with inflation are called:

Correct Answer
verified

If unemployment is below the NAIRU, inflation generally:

Correct Answer
verified

Correct Answer
verified

The table shown provides CPI values for various years. What was the inflation rate in 2016?

Correct Answer
verified

Which measure of inflation best reflects changing prices for the average consumer?

Correct Answer
verified
A

The graph shown displays various price and output levels in an economy. If the economy is currently at point E₃, it must be in:

Correct Answer
verified

The graph shown displays various price and output levels in an economy. What does the "P" on the y-axis stand for?

Correct Answer
verified

Deflation is:

Correct Answer
verified

If an economy produces 1,000 units of output when the price level is $5 and the money supply is $1,000, what is the velocity of money?

Correct Answer
verified

Exam 16: Inflation

The short-run Phillips curve is _______ and the long-run Phillips curve is _______.

Correct AnswerverifiedA

The graph shown displays various price and output levels in an economy. If the economy is currently at point E1, it must be in:

Correct AnswerverifiedShow Answer

Deflation:

Correct AnswerverifiedShow Answer

Neutrality of money is the idea that:

Correct AnswerverifiedShow Answer

Most economists agree that stable economies generate inflation of around:

Correct AnswerverifiedShow Answer

Headline inflation is:

Correct AnswerverifiedA

If the real value of your savings decreases over time:

Correct AnswerverifiedShow Answer

What is the quantity equation?

Correct AnswerverifiedShow Answer

A temporary change in the price level caused by changes in the business cycle is known as:

Correct AnswerverifiedShow Answer

Core inflation:

Correct AnswerverifiedShow Answer

If the nominal interest rate is the same as the real interest rate, then inflation must be:

Correct AnswerverifiedShow Answer

The money, time, and opportunity used to change prices to keep pace with inflation are called:

Correct AnswerverifiedShow Answer

If unemployment is below the NAIRU, inflation generally:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The table shown provides CPI values for various years. What was the inflation rate in 2016?

Correct AnswerverifiedShow Answer

Which measure of inflation best reflects changing prices for the average consumer?

Correct AnswerverifiedA

The graph shown displays various price and output levels in an economy. If the economy is currently at point E3, it must be in:

Correct AnswerverifiedShow Answer

The graph shown displays various price and output levels in an economy. What does the "P" on the y-axis stand for?

Correct AnswerverifiedShow Answer

Deflation is:

Correct AnswerverifiedShow Answer

If an economy produces 1,000 units of output when the price level is $5 and the money supply is $1,000, what is the velocity of money?

Correct AnswerverifiedShow Answer

The short-run Phillips curve is _ and the long-run Phillips curve is _.

Correct Answer
verified
A

The graph shown displays various price and output levels in an economy. If the economy is currently at point E₁, it must be in:

Correct Answer
verified

Correct Answer
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Correct Answer
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A

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verified
A

The graph shown displays various price and output levels in an economy. If the economy is currently at point E₃, it must be in:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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