Question 1

Figure 35-8
Use this graph to answer the questions below. 
-Refer to figure 35-8.Suppose the economy starts at 5% unemployment and 3% inflation and expected inflation remains at 3%.Which one of the following points could the economy move to in the short run if the Federal Reserve pursues a more expansionary monetary policy?

Accepted Answer

A)  7% unemployment and 1% inflation
B)  7% unemployment and 3% inflation
C)  3% unemployment and 5% inflation
D)  3% unemployment and 7% inflationE) B) and D)
F) A) and B)

Question 2

Figure 35-8
Use this graph to answer the questions below. 
-Refer to figure 35-8.Suppose the economy starts at 5% unemployment and 3% inflation and expected inflation remains at 3%.Which one of the following points could the economy move to in the short run if the Federal Reserve pursues a more contractionary monetary policy?

Accepted Answer

A)  7% unemployment and 1% inflation
B)  7% unemployment and 3% inflation
C)  3% unemployment and 5% inflation
D)  3% unemployment and 7% inflationE) All of the above
F) A) and B)

Question 3

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Accepted Answer

A)  both the short and long run.
B)  the short run,but not the long run.
C)  the long run,but not the short run.
D)  neither the short nor the long run.E) None of the above
F) A) and C)

Question 4

A change in expected inflation shifts

Accepted Answer

A)  the short-run Phillips curve,but not the long run Phillips curve.
B)  the long-run Phillips curve,but not the long run Phillips curve.
C)  neither the short-run nor the long-run Phillips curve.
D)  both the short-run and long-run Phillips curve right.E) A) and D)
F) C) and D)

Question 5

The natural rate of unemployment

Accepted Answer

A)  is constant over time.
B)  varies over time,but can't be changed by the government.
C)  is the unemployment rate that the economy tends to move to in the long run.
D)  depends on the rate at which the Fed increases the money supply.E) A) and D)
F) B) and C)

Question 6

Which of the following shifts the long-run Phillips curve left?

Accepted Answer

A)  both an increase in the inflation rate and a decrease in the minimum wage rate
B)  an increase in the inflation rate,but not a decrease in the minimum wage rate
C)  a decrease in the minimum wage rate,but not an increase in the inflation rate
D)  neither a decrease in the minimum wage rate nor an increase in the inflation rateE) A) and B)
F) All of the above

Question 7

Figure 35-7
Use the two graphs in the diagram to answer the following questions. 
-Refer to Figure 35-7.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) All of the above
F) B) and C)

Question 8

Figure 35-8
Use this graph to answer the questions below. 
-Refer to figure 35-8.Suppose the economy starts at 5% unemployment and 3% inflation.If the Federal Reserve pursues an expansionary monetary policy,in the short run the economy moves to

Accepted Answer

A)  3% unemployment and 5% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
B)  3% unemployment and 5% inflation.In the long run the economy moves to 3% unemployment and 5% inflation.
C)  7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
D)  7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 3% inflation.E) All of the above
F) A) and B)

Question 9

Figure 35-6
Use the graph below to answer the following questions. 
-Refer to Figure 35-6.If the economy starts at C and the money supply growth rate increases,in the long run the economy

Accepted Answer

A)  stays at C.
B)  moves to B.
C)  moves to F.
D)  None of the above is consistent wit an increase in the money supply growth rate.E) A) and B)
F) A) and C)

Question 10

Suppose the central bank decreases the growth rate of the money supply.In the short run,this policy change will affect

Accepted Answer

A)  both the unemployment rate and the inflation rate.
B)  the unemployment rate but not the inflation rate.
C)  the inflation rate but not the unemployment rate.
D)  neither the inflation rate nor the unemployment rate.E) None of the above
F) All of the above

Question 11

Assume the analysis of Friedman and Phelps is correct,so that the following equation is valid:
Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - x) .
In this equation,

Accepted Answer

A)  a is a parameter that measures how much actual inflation responds to expected inflation.
B)  a = 0 at the point of intersection of the short-run and long-run Phillips curves.
C)  x is the expected rate of inflation.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 12

If unemployment is below 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) All of the above
F) A) and C)

Question 13

The short-run Phillips curve intersects the long-run Phillips curve where

Accepted Answer

A)  the actual rate of inflation equals the expected rate of inflation.
B)  the actual rate of unemployment equals the natural rate of unemployment.
C)  Both A and B are correct.
D)  None of the above is correct.E) None of the above
F) A) and B)

Question 14

Suppose the Fed increased the growth rate of the money supply.Which of the following would be higher in the long run?

Accepted Answer

A)  both the natural rate of unemployment and the inflation rate
B)  the natural rate of unemployment,but not the inflation rate
C)  the inflation rate,but not the natural rate of unemployment
D)  neither the natural unemployment rate nor the inflation rateE) A) and D)
F) C) and D)

Question 15

If the unemployment rate is below the natural rate,then

Accepted Answer

A)  inflation is less than expected.As inflation expectations are revised the short-run Phillips curve will shift right.
B)  inflation is less than expected.As inflation expectations are revised the short-run Phillips curve will shift left.
C)  inflation is greater than expected.As inflation expectations are revised the short-run Phillips curve will shift left.
D)  inflation is greater than expected.As inflation expectations are revised the short-run Phillips curve will shift right.E) All of the above
F) C) and D)

Question 16

If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same,then policymakers

Accepted Answer

A)  can not exploit a tradeoff between inflation and unemployment in either the short or long run.
B)  can exploit a tradeoff between inflation and unemployment in the short run but not in the long run.
C)  can exploit a tradeoff between inflation and unemployment in both the short run and the long run.
D)  can exploit a tradeoff between inflation and unemployment in the long run,but not the short run.E) C) and D)
F) None of the above

Question 17

The long-run Phillips curve would shift to the left if

Accepted Answer

A)  the money supply growth rate increased or if effective job-training programs were implemented.
B)  the money supply growth rate increased,but not if effective job-training programs were implemented.
C)  effective job-training programs were implemented,but not if the money supply growth rate increased.
D)  None of the above is correct.E) None of the above
F) A) and D)

Question 18

The equation,
​
Unemployment rate = Natural rate of unemployment - a × (Αctual 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) None of the above
F) All of the above

Question 19

In the late 1960's,Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Accepted Answer

A)  existed in the long run and the short run.
B)  existed in the long run but not the short run.
C)  existed in the short run but not the long run.
D)  did not exist.E) None of the above
F) A) and D)

Question 20

Suppose that money supply growth increases.In the long run,this increases employment according to

Accepted Answer

A)  both the long-run Phillips curve and the aggregate demand and aggregate supply model.
B)  neither the long-run Phillips curve nor the aggregate demand and aggregate supply model.
C)  the long-run Phillips curve,but not the aggregate demand and aggregate supply model.
D)  the aggregate demand and aggregate supply model,but not the long-run Phillips curveE) None of the above
F) All of the above

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

In the late 1960's,Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Correct Answer
verified

Suppose that money supply growth increases.In the long run,this increases employment according to

Correct Answer
verified

Correct Answer
verified

Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6.If the economy starts at C and the money supply growth rate increases,in the long run the economy

Correct Answer
verified

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Correct Answer
verified

Which of the following shifts the long-run Phillips curve left?

Correct Answer
verified

Suppose the central bank decreases the growth rate of the money supply.In the short run,this policy change will affect

Correct Answer
verified

The long-run Phillips curve would shift to the left if

Correct Answer
verified

If the unemployment rate is below the natural rate,then

Correct Answer
verified

A change in expected inflation shifts

Correct Answer
verified

Figure 35-8 Use this graph to answer the questions below. -Refer to figure 35-8.Suppose the economy starts at 5% unemployment and 3% inflation.If the Federal Reserve pursues an expansionary monetary policy,in the short run the economy moves to

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Assume the analysis of Friedman and Phelps is correct,so that the following equation is valid: Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - x) . In this equation,

Correct Answer
verified

The natural rate of unemployment

Correct Answer
verified

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7.The economy would move from 3 to 5

Correct Answer
verified

If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same,then policymakers

Correct Answer
verified

The short-run Phillips curve intersects the long-run Phillips curve where

Correct Answer
verified

The equation, Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) ,

Correct Answer
verified

Suppose the Fed increased the growth rate of the money supply.Which of the following would be higher in the long run?

Correct Answer
verified

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

In the late 1960's,Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Correct AnswerverifiedShow Answer

Suppose that money supply growth increases.In the long run,this increases employment according to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 35-6 Use the graph below to answer the following questions. -Refer to Figure 35-6.If the economy starts at C and the money supply growth rate increases,in the long run the economy

Correct AnswerverifiedShow Answer

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Correct AnswerverifiedShow Answer

Which of the following shifts the long-run Phillips curve left?

Correct AnswerverifiedShow Answer

Suppose the central bank decreases the growth rate of the money supply.In the short run,this policy change will affect

Correct AnswerverifiedShow Answer

The long-run Phillips curve would shift to the left if

Correct AnswerverifiedShow Answer

If the unemployment rate is below the natural rate,then

Correct AnswerverifiedShow Answer

A change in expected inflation shifts

Correct AnswerverifiedShow Answer

Figure 35-8 Use this graph to answer the questions below. -Refer to figure 35-8.Suppose the economy starts at 5% unemployment and 3% inflation.If the Federal Reserve pursues an expansionary monetary policy,in the short run the economy moves to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume the analysis of Friedman and Phelps is correct,so that the following equation is valid: Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - x) . In this equation,

Correct AnswerverifiedShow Answer

The natural rate of unemployment

Correct AnswerverifiedShow Answer

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7.The economy would move from 3 to 5

Correct AnswerverifiedShow Answer

If people eventually adjust their inflation expectations so that in the long run actual and expected inflation are the same,then policymakers

Correct AnswerverifiedShow Answer

The short-run Phillips curve intersects the long-run Phillips curve where

Correct AnswerverifiedShow Answer

The equation, ​ Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) , ​

Correct AnswerverifiedShow Answer

Suppose the Fed increased the growth rate of the money supply.Which of the following would be higher in the long run?

Correct AnswerverifiedShow Answer

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The equation, Unemployment rate = Natural rate of unemployment - a × (Αctual inflation - Expected inflation) ,

Correct Answer
verified

Correct Answer
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