Question 1

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

Question 2

Figure 22-2
Use the pair of diagrams below to answer the following questions.

-Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

Accepted Answer

A)   E and 1.
B)   D and 2.
C)   D and 3.
D)   None of the above is correct.E) B) and C)
F) A) and B)

Question 3

Figure 22-1.The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves.On the right-hand diagram,U represents the unemployment rate.

-Refer to Figure 22-1.Assuming the price level in the previous year was 100,point F on the right-hand graph corresponds to

Accepted Answer

A)   point A on the left-hand graph.
B)   point B on the left-hand graph.
C)   point C on the left-hand graph.
D)   point D on the left-hand graph.E) None of the above
F) A) and C)

Question 4

Friedman argued that the Fed could use monetary policy to peg

Accepted Answer

A)   the level of real GDP.
B)   the growth rate of real GDP.
C)   the rate of unemployment.
D)   None of the above is correct.E) All of the above
F) None of the above

Question 5

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 C to B

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

Question 6

Why does a downward-sloping Phillips curve imply a positive sacrifice ratio?

Accepted Answer

A downward-sloping Phillips curve implie...

Question 7

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

Accepted Answer

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

Question 8

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

Accepted Answer

A)   downward-sloping,which implies that monetary and fiscal policies can influence the level of unemployment in the long run.
B)   downward-sloping,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run.
C)   vertical,which implies that monetary and fiscal policies cannot influence the level of unemployment in the long run.
D)   vertical,which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run.E) C) and D)
F) B) and C)

Question 9

For many years country A has had a lower unemployment rate than country B.According to the long-run Phillips curve which of the following could explain this? Country A has

Accepted Answer

A)   maintained a higher money supply growth rate.
B)   maintained a lower money supply growth rate.
C)   a higher minimum wage than country B.
D)   a lower minimum wage than country B.E) All of the above
F) B) and D)

Question 10

Contractionary monetary policy

Accepted Answer

A)   leads to disinflation and makes the short-run Phillips curve shift right.
B)   leads to disinflation and makes the short-run Phillips curve shift left.
C)   does not lead to disinflation but makes the short-run Phillips curve shift right.
D)   does not lead to disinflation but makes the short-run Phillips curve shift left.E) A) and C)
F) All of the above

Question 11

If expected inflation decreases does the short-run Phillips curve shift? If so,what direction does it shift? Does the long-run Phillips curve shift? If so,what direction does it shift?

Accepted Answer

If expected inflation decrease...

Question 12

Disinflation is like

Accepted Answer

A)   slowing a car down,whereas deflation is like putting the car into reverse gear.
B)   maintaining a car's speed,whereas deflation is like slowing the car down.
C)   putting a car into reverse gear,whereas deflation is like slowing the car down.
D)   maintaining a car's speed,whereas deflation is like putting the car into reverse gear.E) None of the above
F) All of the above

Question 13

From 2008-2009 the Federal Reserve created a very large increase in the money supply.According to the short-run Phillips curve this policy should have

Accepted Answer

A)   raised inflation and unemployment.
B)   raised inflation and reduced unemployment.
C)   reduced inflation and raised unemployment.
D)   reduced inflation and unemployment.E) None of the above
F) B) and D)

Question 14

Figure 22-5
Use the graph below to answer the following questions. 
-Refer to Figure 22-5.Curve 1 is the

Accepted Answer

A)   long-run aggregate supply curve.
B)   short-run aggregate supply curve.
C)   long-run Phillips curve.
D)   short-run Phillips curve.E) B) and D)
F) A) and D)

Question 15

If inflation expectations decline,then the short-run Phillips curve shifts

Accepted Answer

A)   left,so that at any inflation rate unemployment is lower in the short run than before.
B)   right,so that at any inflation rate unemployment is lower in the short run than before.
C)   right,so that at any inflation rate unemployment is higher in the short run than before.
D)   left,so that at any inflation rate unemployment is higher in the short run than before.E) All of the above
F) A) and D)

Question 16

If the minimum wage increased,then at any given rate of inflation

Accepted Answer

A)   both output and employment would be higher.
B)   neither output nor employment would be higher.
C)   output would be higher and unemployment would be lower.
D)   output would be lower and unemployment would be higher.E) A) and D)
F) B) and C)

Question 17

Soon after he became the chairman of the Federal Reserve System in 1979,Paul Volcker embarked on a course

Accepted Answer

A)   of accommodative monetary policy.
B)   of disinflation.
C)   that was designed to reduce the unemployment rate.
D)   that produced results that were clearly consistent with those predicted by rational-expectations theorists.E) A) and D)
F) B) and C)

Question 18

An event that directly affects firms' costs of production and thus the prices they charge is called

Accepted Answer

A)   a Phillips contraction.
B)   an inflationary spiral.
C)   a demand shock.
D)   a supply shock.E) A) and B)
F) A) and C)

Question 19

Other things the same,if there is an increase in the money supply growth rate that is larger than expected,then in the short run

Accepted Answer

A)   the natural rate of unemployment rises.
B)   the natural rate of unemployment falls.
C)   the unemployment rate will be above its natural rate.
D)   the unemployment rate will be below its natural rate.E) C) and D)
F) All of the above

Question 20

Figure 22-2
Use the pair of diagrams below to answer the following questions.

-Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,an increase in government expenditures moves the economy to

Accepted Answer

A)   B and 2.
B)   B and 3.
C)   B and 3
D)   None of the above is correct.E) A) and B)
F) A) and C)

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

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

Correct Answer
verified

Other things the same,if there is an increase in the money supply growth rate that is larger than expected,then in the short run

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 C to B

Correct Answer
verified

From 2008-2009 the Federal Reserve created a very large increase in the money supply.According to the short-run Phillips curve this policy should have

Correct Answer
verified

For many years country A has had a lower unemployment rate than country B.According to the long-run Phillips curve which of the following could explain this? Country A has

Correct Answer
verified

Friedman argued that the Fed could use monetary policy to peg

Correct Answer
verified

Why does a downward-sloping Phillips curve imply a positive sacrifice ratio?

Correct Answer
verified
A downward-sloping Phillips curve implie...
View Answer

An event that directly affects firms' costs of production and thus the prices they charge is called

Correct Answer
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Figure 22-5 Use the graph below to answer the following questions. -Refer to Figure 22-5.Curve 1 is the

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Soon after he became the chairman of the Federal Reserve System in 1979,Paul Volcker embarked on a course

Correct Answer
verified

If the minimum wage increased,then at any given rate of inflation

Correct Answer
verified

Contractionary monetary policy

Correct Answer
verified

Disinflation is like

Correct Answer
verified

Figure 22-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

Correct Answer
verified

If inflation expectations decline,then the short-run Phillips curve shifts

Correct Answer
verified

If expected inflation decreases does the short-run Phillips curve shift? If so,what direction does it shift? Does the long-run Phillips curve shift? If so,what direction does it shift?

Correct Answer
verified
If expected inflation decrease...
View Answer

Figure 22-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,an increase in government expenditures moves the economy to

Correct Answer
verified

Correct Answer
verified

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

Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is

Correct AnswerverifiedShow Answer

Other things the same,if there is an increase in the money supply growth rate that is larger than expected,then in the short run

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 C to B

Correct AnswerverifiedShow Answer

From 2008-2009 the Federal Reserve created a very large increase in the money supply.According to the short-run Phillips curve this policy should have

Correct AnswerverifiedShow Answer

For many years country A has had a lower unemployment rate than country B.According to the long-run Phillips curve which of the following could explain this? Country A has

Correct AnswerverifiedShow Answer

Friedman argued that the Fed could use monetary policy to peg

Correct AnswerverifiedShow Answer

Why does a downward-sloping Phillips curve imply a positive sacrifice ratio?

Correct AnswerverifiedA downward-sloping Phillips curve implie...View AnswerShow Answer

An event that directly affects firms' costs of production and thus the prices they charge is called

Correct AnswerverifiedShow Answer

Figure 22-5 Use the graph below to answer the following questions. -Refer to Figure 22-5.Curve 1 is the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Soon after he became the chairman of the Federal Reserve System in 1979,Paul Volcker embarked on a course

Correct AnswerverifiedShow Answer

If the minimum wage increased,then at any given rate of inflation

Correct AnswerverifiedShow Answer

Contractionary monetary policy

Correct AnswerverifiedShow Answer

Disinflation is like

Correct AnswerverifiedShow Answer

Figure 22-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,a decrease in the money supply moves the economy to

Correct AnswerverifiedShow Answer

If inflation expectations decline,then the short-run Phillips curve shifts

Correct AnswerverifiedShow Answer

If expected inflation decreases does the short-run Phillips curve shift? If so,what direction does it shift? Does the long-run Phillips curve shift? If so,what direction does it shift?

Correct AnswerverifiedIf expected inflation decrease...View AnswerShow Answer

Figure 22-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 22-2.If the economy starts at C and 1,then in the short run,an increase in government expenditures moves the economy to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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A downward-sloping Phillips curve implie...
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If expected inflation decrease...
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