Question 1

Just as the aggregate-supply curve slopes upward only in the short run,the trade-off between inflation and unemployment holds only in the short run.

Accepted Answer

A) True 
 B)False

Question 2

In the long run what primarily determines the natural rate of unemployment?
 In the long run what primarily determines the inflation rate?
 How does this relate to the classical dichotomy?

Accepted Answer

In the long run the natural rate of unem...

Question 3

The equation,
Unemployment rate = Natural rate of unemployment - a * ctual inflation - Expected inflation) ,

Accepted Answer

A)  Is the equation of the short-run Phillips curve.
B)  implies there can be no stable short-run Phillips curve.
C)  reflects the reasoning of Friedman and Phelps.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 4

If the central bank decreases the money supply,then in the short run prices

Accepted Answer

A)  rise and unemployment falls.
B)  fall and unemployment rises.
C)  and unemployment rise.
D)  and unemployment fall.E) C) and D)
F) A) and D)

Question 5

Proponents of rational expectations argued that the sacrifice ratio

Accepted Answer

A)  could be high because it was rational for people not to immediately change their expectations.
B)  could be high because people might adjust their expectations quickly if they found anti-inflation policy credible.
C)  could be low because it was rational for people not to immediately change their expectations.
D)  could be low because people might adjust their expectations quickly if they found anti-inflation policy credible.E) All of the above
F) A) and C)

Question 6

The classical notion of monetary neutrality is consistent both with a vertical long-run aggregate-supply curve and with a vertical long-run Phillips curve.

Accepted Answer

A) True 
 B)False

Question 7

In the long run,a decrease in the money supply growth rate

Accepted Answer

A)  increases inflation and shifts the short-run Phillips curve right.
B)  increases inflation and shifts the short-run Phillips curve left.
C)  decreases inflation and shifts the short-run Philips curve right.
D)  decreases inflation and shifts the short-run Phillips curve left.E) A) and C)
F) C) and D)

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

The classical notion of monetary neutrality is consistent both with a vertical long-run aggregate-supply curve and with a vertical long-run Phillips curve.

Correct Answer
verified

Proponents of rational expectations argued that the sacrifice ratio

Correct Answer
verified

In the long run,a decrease in the money supply growth rate

Correct Answer
verified

In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?

Correct Answer
verified
In the long run the natural rate of unem...
View Answer

The equation, Unemployment rate = Natural rate of unemployment - a * ctual inflation - Expected inflation) ,

Correct Answer
verified

Just as the aggregate-supply curve slopes upward only in the short run,the trade-off between inflation and unemployment holds only in the short run.

Correct Answer
verified

If the central bank decreases the money supply,then in the short run prices

Correct Answer
verified

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

The classical notion of monetary neutrality is consistent both with a vertical long-run aggregate-supply curve and with a vertical long-run Phillips curve.

Correct AnswerverifiedShow Answer

Proponents of rational expectations argued that the sacrifice ratio

Correct AnswerverifiedShow Answer

In the long run,a decrease in the money supply growth rate

Correct AnswerverifiedShow Answer

In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?

Correct AnswerverifiedIn the long run the natural rate of unem...View AnswerShow Answer

The equation, Unemployment rate = Natural rate of unemployment - a * ctual inflation - Expected inflation) ,

Correct AnswerverifiedShow Answer

Just as the aggregate-supply curve slopes upward only in the short run,the trade-off between inflation and unemployment holds only in the short run.

Correct AnswerverifiedShow Answer

If the central bank decreases the money supply,then in the short run prices

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In the long run the natural rate of unem...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified