Exam 14: Macroeconomic Policy: Challenges in a Global Economy

If policymakers use contractionary policy to reduce inflation, the unemployment rate will be:

During the 1960s in the United States, policymakers believed that if they accepted minor increases in inflation, they could keep unemployment low.

The unemployment rate during the 2007-2009 recession was _____ the unemployment rate in the previous two recessions.

According to the equation for the Phillips curve, if nominal wages and labor productivity both rise by 3%:

The long-run Phillips curve:

New oversight on financial firms will probably include:

If workers fail to anticipate inflation increases, their real wages are likely to fall.

Accelerating inflation causes nominal wages to rise, shifting the short-run aggregate supply curve to the _____ and the Phillips curve to the _____.

The natural rate of unemployment is:

The long-run Phillips curve is the counterpart to the:

The original Phillips curve showed a _____ relationship between _____ and unemployment rates.

The rational expectations theory describes the assumption that people are _____, and the adaptive expectations theory describes the assumption that people are _____.

The simultaneous occurrence of rising inflation and rising unemployment is called:

Which of these is NOT a problem for policymakers who want to reduce the national debt?

The shift outward in the Phillips curve in the 1970s was caused by:

New Keynesian economists critique rational expectations by arguing that short-term wage stickiness is brought about by:

One of the Reagan administration's economic policies to combat stagflation was to increase government spending.

Even though recent legislation has slowed the rise in health care costs, the overall cost of Medicare remains unsustainable in the long term.

The 2007-2009 recession can be shown as a combination of a(n) _____ in aggregate demand and _____ in the short-run aggregate supply.

The short-run Phillips curve holds _____ constant.