Question 1

Other things the same, if the central bank decreases the rate at which it increases the money supply, then

Accepted Answer

A) unemployment and inflation rise in the short run. 
B) unemployment rises and inflation falls in the short run. 
C) unemployment falls and inflation rises in the short run. 
D) unemployment and inflation fall in the short run. 
A) unemployment and inflation rise in the short run. 
B) unemployment rises and inflation falls in the short run. 
C) unemployment falls and inflation rises in the short run. 
D) unemployment and inflation fall in the short run.

Question 2

Just as the aggregate-demand curve slopes downward only in the short run, the trade-off between inflation and unemployment holds only in the long run.

Accepted Answer

A) True 
 B)False

Question 3

Figure 35-4. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the left-hand diagram, the price level is measured on the vertical axis; on the right-hand diagram, the inflation rate is measured on the vertical axis.    
-Refer to Figure 35-4. What is measured along the horizontal axis of the right-hand graph?

Accepted Answer

A) the interest rate 
B) the price level 
C) the government's budget deficit as a percent of GDP 
D) the unemployment rate 
A) the interest rate 
B) the price level 
C) the government's budget deficit as a percent of GDP 
D) the unemployment rate

Question 4

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

Accepted Answer

A) falls, so there are upward pressures on wages and prices. 
B) falls, so there are downward pressures on wages and prices. 
C) rises, so there are upward pressures on wages and prices. 
D) rises, so there are downward pressures on wages and prices. 
A) falls, so there are upward pressures on wages and prices. 
B) falls, so there are downward pressures on wages and prices. 
C) rises, so there are upward pressures on wages and prices. 
D) rises, so there are downward pressures on wages and prices.

Question 5

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

Question 6

Figure 35-1. 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 35-1. 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. 
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.

Question 7

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is downward-sloping?

Accepted Answer

A) both the long-run Phillips curve and the long-run aggregate-supply curve 
B) neither the long-run Phillips curve nor the long-run aggregate-supply curve 
C) the long-run Phillips curve, but not the long-run aggregate-supply curve 
D) the short-run Phillips curve, but not the long-run aggregate-supply curve 
A) both the long-run Phillips curve and the long-run aggregate-supply curve 
B) neither the long-run Phillips curve nor the long-run aggregate-supply curve 
C) the long-run Phillips curve, but not the long-run aggregate-supply curve 
D) the short-run Phillips curve, but not the long-run aggregate-supply curve

Question 9

Figure 35-3. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the left-hand diagram, Y represents output and on the right-hand diagram, U represents the unemployment rate.    
-Refer to Figure 35-3. What is measured along the vertical axis of the left-hand graph?

Accepted Answer

A) the wage rate 
B) the inflation rate 
C) the price level 
D) the change in output from one year to the next 
A) the wage rate 
B) the inflation rate 
C) the price level 
D) the change in output from one year to the next

Question 10

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Accepted Answer

A) True 
 B)False

Question 11

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 rate 
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 rate

Question 12

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

Accepted Answer

A) it seemed to work for wages but not for inflation. 
B) monetary policy was ineffective in combating inflation. 
C) the Phillips curve did not apply in the long run. 
D) Phillips had made errors in collecting his data. 
A) it seemed to work for wages but not for inflation. 
B) monetary policy was ineffective in combating inflation. 
C) the Phillips curve did not apply in the long run. 
D) Phillips had made errors in collecting his data.

Question 13

Samuelson and Solow reasoned that when aggregate demand was low, unemployment was

Accepted Answer

A) high, so there was upward pressure on wages and prices. 
B) high, so there was downward pressure on wages and prices. 
C) low, so there was upward pressure on wages and prices. 
D) low, so there was downward pressure on wages and prices. 
A) high, so there was upward pressure on wages and prices. 
B) high, so there was downward pressure on wages and prices. 
C) low, so there was upward pressure on wages and prices. 
D) low, so there was downward pressure on wages and prices.

Question 14

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Accepted Answer

A) adverse supply shocks that shifted the short-run Phillips curve left. 
B) adverse supply shocks that shifted the short-run Phillips curve right. 
C) favorable supply shocks that shifted the short-run Phillips curve left. 
D) favorable supply shocks that shifted the short-run Phillips curve right. 
A) adverse supply shocks that shifted the short-run Phillips curve left. 
B) adverse supply shocks that shifted the short-run Phillips curve right. 
C) favorable supply shocks that shifted the short-run Phillips curve left. 
D) favorable supply shocks that shifted the short-run Phillips curve right.

Question 15

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

Accepted Answer

No. Since the price level is f

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. 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 GDP 
A) time 
B) the unemployment rate 
C) real GDP 
D) the growth rate of real GDP

Question 17

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

Accepted Answer

A) increases and unemployment increases. 
B) increases and unemployment decreases. 
C) decreases and unemployment increases. 
D) decreases and unemployment decreases. 
A) increases and unemployment increases. 
B) increases and unemployment decreases. 
C) decreases and unemployment increases. 
D) decreases and unemployment decreases.

Question 18

Which of the following is vertical?

Accepted Answer

A) both the long-run Phillips curve and the long-run aggregate supply curve 
B) neither the long-run Phillips curve nor the long-run aggregate supply curve 
C) the long-run Phillips curve, but not the long-run aggregate supply curve 
D) The long-run Phillips curve, but not the long-run aggregate supply curve 
A) both the long-run Phillips curve and the long-run aggregate supply curve 
B) neither the long-run Phillips curve nor the long-run aggregate supply curve 
C) the long-run Phillips curve, but not the long-run aggregate supply curve 
D) The long-run Phillips curve, but not the long-run aggregate supply curve

Question 19

A vertical long-run Phillips curve is consistent with

Accepted Answer

A) the conclusion of Friedman and Phelps, but it is not consistent with the classical idea of monetary neutrality. 
B) the classical idea of monetary neutrality, but it is not consistent with the conclusion of Friedman and Phelps. 
C) both the conclusion of Friedman and Phelps and the classical idea of monetary neutrality. 
D) neither the conclusion of Friedman and Phelps nor the classical idea of monetary neutrality. 
A) the conclusion of Friedman and Phelps, but it is not consistent with the classical idea of monetary neutrality. 
B) the classical idea of monetary neutrality, but it is not consistent with the conclusion of Friedman and Phelps. 
C) both the conclusion of Friedman and Phelps and the classical idea of monetary neutrality. 
D) neither the conclusion of Friedman and Phelps nor the classical idea of monetary neutrality.

Question 20

If consumption expenditures fall, then in the short run

Accepted Answer

A) inflation and unemployment rise. 
B) inflation rises and unemployment falls. 
C) inflation falls and unemployment rises. 
D) inflation and unemployment fall. 
A) inflation and unemployment rise. 
B) inflation rises and unemployment falls. 
C) inflation falls and unemployment rises. 
D) inflation and unemployment fall.

Exam 35: The Short-Run Tradeoff Between Inflation and Unemployment

Other things the same, if the central bank decreases the rate at which it increases the money supply, then

Just as the aggregate-demand curve slopes downward only in the short run, the trade-off between inflation and unemployment holds only in the long run.

When aggregate demand shifts right along the short-run aggregate supply curve, unemployment

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Which of the following is downward-sloping?

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

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

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

Samuelson and Solow reasoned that when aggregate demand was low, unemployment was

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

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?

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

Which of the following is vertical?

A vertical long-run Phillips curve is consistent with

If consumption expenditures fall, then in the short run

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

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