Exam 31: Macro Inflation and Unemployment

Which of the following affect the values of inflation and unemployment? I.changes in government spending II.expectations about the price level III.changes in nominal wages IV.changes in money supply

In the long run, sustained inflation is due to

Sustained inflation over many years is most likely due to increases in the money supply in excess of increases in potential output.

The efficiency-wage theory predicts that

Which of the following is a cost of unemployment? I.output foregone II.unemployment compensation that must be paid III.rising inflation that erodes the value of money

As the duration of job search increases, there will likely be

For a given labor force, an increase in real GDP implies a decrease in unemployment.

Suppose an economy is operating with a contractionary gap.In this case, policymakers would seek to move the economy

Prior to the 1970s, the model of choice was the aggregate expenditures model.According to This model, if the economy was in equilibrium below full employment, then the primary economic problem would be

In the three phases of the inflation-unemployment cycle, a period marked by rising unemployment and high inflation is called the

In the recovery phase of the inflation-unemployment cycle,

In the recovery phase of the inflation-unemployment cycle,

Figure 16-6 -Refer to Figure 16-6.Suppose the economy was operating at point e in period 1.Expansionary fiscal and monetary policies adopted in period 1 resulted in a movement to point g in period 3.What happens when workers and firms become aware of a rise in the general price to P_g?

Suppose that rising productivity increases potential output in each period by 4%.What kind of monetary policy would be needed to maintain a zero rate of inflation at full employment?

Figure 16-7 -Refer to Figure 16-7.If the economy is in equilibrium at point 3,