Question 1

If the Fed wants to reverse the effects of a favorable supply shock on unemployment,it should

Accepted Answer

A)  increase the money supply growth rate which raises the inflation rate.
B)  increase the money supply growth rate which reduces the inflation rate.
C)  decrease the money supply growth rate which raises the inflation rate.
D)  decrease the money supply growth rate which reduces the inflation rate.E) All of the above
F) C) and D)

Question 2

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) A) and C)

Question 3

An adverse supply shock will cause output

Accepted Answer

A)  and prices to rise.
B)  and prices to fall.
C)  to rise and prices to fall.
D)  to fall and prices to rise.E) A) and D)
F) A) and B)

Question 4

In 1980,the U.S.misery index was

Accepted Answer

A)  much higher than average.
B)  slightly higher than average.
C)  about average.
D)  below average.E) A) and D)
F) A) and C)

Question 5

Suppose that a small economy that produces mostly agricultural goods experiences a year with exceptionally good conditions for growing crops.The good weather would

Accepted Answer

A)  shift both the short-run aggregate supply and the short-run Phillips curve right.
B)  shift both the short-run aggregate supply and the short-run Phillips curve left.
C)  shift the short-run aggregate supply curve to the right,and the short-run Phillips curve to the left.
D)  shift the short-run aggregate supply curve to the left,and the short-run Phillips curve to the right.E) None of the above
F) All of the above

Question 6

A shock increases the costs of production.Given the effects of this shock,if the central bank wants to return the unemployment rate towards its previous level it would

Accepted Answer

A)  increase the rate at which the money supply increases.This will also move inflation closer to its previous rate..
B)  increase the rate at which the money supply increases.However,this will make inflation higher than its previous rate
C)  decrease the rate at which the money supply increases.This will also move inflation closer to its original rate
D)  decrease the rate at which the money supply increases.However,this will make higher than its previous rate.E) A) and B)
F) A) and C)

Question 7

A favorable supply shock will cause inflation to

Accepted Answer

A)  rise and shift the short-run Phillips curve right.
B)  rise and shift the short-run Phillips curve left.
C)  fall and shift the short-run Phillips curve right.
D)  fall and shift the short-run Phillips curve left.E) C) and D)
F) B) and D) D

Question 8

In response to an adverse supply shock,suppose the Fed implements accommodating monetary policy.Which of the following occurs as a result of the accommodating monetary policy?

Accepted Answer

A)  Aggregate demand shifts to the left,which increases inflation and increases unemployment in the short run.
B)  Aggregate demand shifts to the left,which decreases inflation and increases unemployment in the short run.
C)  Aggregate demand shifts to the right,which increases inflation and increases unemployment in the short run.
D)  Aggregate demand shifts to the right,which increases inflation and decreases unemployment in the short run.E) A) and B)
F) B) and C)

Question 9

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) A) and B)
F) A) and C)

Question 10

Figure 35-9.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 AS2 could be a consequence of A) an increase in the money supply. B) an adverse supply shock. C) a decrease of output from Y1 to Y2. D) a slow adjustment of people's expectation of the inflation rate." class="answers-bank-image d-inline" rel="preload" > 1 to AS2 could be a consequence of A) an increase in the money supply. B) an adverse supply shock. C) a decrease of output from Y1 to Y2. D) a slow adjustment of people's expectation of the inflation rate." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 35-9.The shift of the aggregate-supply curve from AS1 to AS2 could be a consequence of

Accepted Answer

A)  an increase in the money supply.
B)  an adverse supply shock.
C)  a decrease of output from Y1 to Y2.
D)  a slow adjustment of people's expectation of the inflation rate.E) All of the above
F) A) and B)

Question 11

If there is an increase in the price of oil,then

Accepted Answer

A)  unemployment rises.If the central bank tries to counter this increase,inflation rises.
B)  unemployment rises.If the central bank tries to counter this increase,inflation falls.
C)  unemployment falls.If the central bank tries to counter this decrease,inflation falls.
D)  unemployment falls.If the central bank tries to counter this decrease,inflation rises.E) A) and B)
F) A) and C)

Question 12

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) None of the above

Question 13

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply,then in the short run the Federal Reserve's action

Accepted Answer

A)  lowers both inflation and unemployment.
B)  lowers inflation but raises unemployment.
C)  raises inflation but lowers unemployment.
D)  raises both inflation and unemployment.E) All of the above
F) C) and D)

Question 14

Figure 35-9.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."  
-Refer to Figure 35-9.What is measured along the horizontal axis of the right-hand graph?

Accepted Answer

A)  time
B)  the unemployment rate
C)  real GDP
D)  the growth rate of real GDPE) A) and B)
F) A) and D) B

Question 15

The large increase in oil prices in the 1970s was caused primarily by a(n)

Accepted Answer

A)  increase in demand for oil.
B)  decrease in demand for oil.
C)  decrease in the supply of oil.
D)  increase in the supply of oil.E) A) and B)
F) A) and C)

Question 16

Figure 35-9.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."  
-Refer to Figure 35-9.A movement of the economy from point A to point B,and at the same time a movement from point C to point D,would be described as

Accepted Answer

A)  the outcome of a favorable supply shock.
B)  falling inflation.
C)  stagflation.
D)  All of the above are correct.E) All of the above
F) B) and C)

Question 17

An adverse supply shock causes output to

Accepted Answer

A)  rise.To counter this a central bank would increase the money supply.
B)  rise.To counter this a central bank would decrease the money supply.
C)  fall.To counter this a central bank would increase the money supply.
D)  fall.To counter this a central bank would decrease the money supply.E) B) and D)
F) C) and D) C

Question 18

Which of the following is correct if there is an adverse supply shock?

Accepted Answer

A)  The short-run aggregate supply curve and the short-run Phillips curve both shift right.
B)  The short-run aggregate supply curve and the short-run Phillips curve both shift left.
C)  The short-run aggregate supply curve shifts right and the short-run Phillips curve shifts left.
D)  The short-run aggregate supply curve shifts left and the short-run Phillips curve shifts right.E) A) and B)
F) A) and D)

Question 19

In the United States during the 1970s,expected inflation

Accepted Answer

A)  rose substantially.
B)  rose slightly.
C)  fell slightly.
D)  fell substantially.E) All of the above
F) None of the above

Question 20

In the 1970's the Federal Reserve responded to an adverse supply shock.Its policy made

Accepted Answer

A)  the recession that followed smaller and so provided a more favorable tradeoff between inflation and unemployment.
B)  the recession that followed smaller,but in doing so produced a less favorable tradeoff between inflation and unemployment.
C)  the recession that followed larger,but in doing so provided a more favorable tradeoff between inflation and unemployment.
D)  the recession that followed larger and also produced a less favorable tradeoff between inflation and unemployment.E) A) and B)
F) A) and C)

Exam 22: The Short Run Trade Off Between Inflation and Unemployment: Shifts in the Phillips Curve the Role of Supply Shocks

If the Fed wants to reverse the effects of a favorable supply shock on unemployment,it should

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

An adverse supply shock will cause output

Correct Answer
verified

In 1980,the U.S.misery index was

Correct Answer
verified

Suppose that a small economy that produces mostly agricultural goods experiences a year with exceptionally good conditions for growing crops.The good weather would

Correct Answer
verified

A shock increases the costs of production.Given the effects of this shock,if the central bank wants to return the unemployment rate towards its previous level it would

Correct Answer
verified

A favorable supply shock will cause inflation to

Correct Answer
verified
D

In response to an adverse supply shock,suppose the Fed implements accommodating monetary policy.Which of the following occurs as a result of the accommodating monetary policy?

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

Figure 35-9.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." -Refer to Figure 35-9.The shift of the aggregate-supply curve from AS₁ to AS₂ could be a consequence of

Correct Answer
verified

If there is an increase in the price of oil,then

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

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply,then in the short run the Federal Reserve's action

Correct Answer
verified

Figure 35-9.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." -Refer to Figure 35-9.What is measured along the horizontal axis of the right-hand graph?

Correct Answer
verified
B

The large increase in oil prices in the 1970s was caused primarily by a(n)

Correct Answer
verified

Correct Answer
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An adverse supply shock causes output to

Correct Answer
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C

Which of the following is correct if there is an adverse supply shock?

Correct Answer
verified

In the United States during the 1970s,expected inflation

Correct Answer
verified

In the 1970's the Federal Reserve responded to an adverse supply shock.Its policy made

Correct Answer
verified

Exam 22: The Short Run Trade Off Between Inflation and Unemployment: Shifts in the Phillips Curve the Role of Supply Shocks

If the Fed wants to reverse the effects of a favorable supply shock on unemployment,it should

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

An adverse supply shock will cause output

Correct AnswerverifiedShow Answer

In 1980,the U.S.misery index was

Correct AnswerverifiedShow Answer

Suppose that a small economy that produces mostly agricultural goods experiences a year with exceptionally good conditions for growing crops.The good weather would

Correct AnswerverifiedShow Answer

A shock increases the costs of production.Given the effects of this shock,if the central bank wants to return the unemployment rate towards its previous level it would

Correct AnswerverifiedShow Answer

A favorable supply shock will cause inflation to

Correct AnswerverifiedD

In response to an adverse supply shock,suppose the Fed implements accommodating monetary policy.Which of the following occurs as a result of the accommodating monetary policy?

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

Figure 35-9.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." -Refer to Figure 35-9.The shift of the aggregate-supply curve from AS1 to AS2 could be a consequence of

Correct AnswerverifiedShow Answer

If there is an increase in the price of oil,then

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

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply,then in the short run the Federal Reserve's action

Correct AnswerverifiedShow Answer

Figure 35-9.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." -Refer to Figure 35-9.What is measured along the horizontal axis of the right-hand graph?

Correct AnswerverifiedB

The large increase in oil prices in the 1970s was caused primarily by a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An adverse supply shock causes output to

Correct AnswerverifiedC

Which of the following is correct if there is an adverse supply shock?

Correct AnswerverifiedShow Answer

In the United States during the 1970s,expected inflation

Correct AnswerverifiedShow Answer

In the 1970's the Federal Reserve responded to an adverse supply shock.Its policy made

Correct AnswerverifiedShow Answer

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D

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Figure 35-9.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." -Refer to Figure 35-9.The shift of the aggregate-supply curve from AS₁ to AS₂ could be a consequence of

Correct Answer
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Correct Answer
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Correct Answer
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B

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C

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