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

In the long run, the inflation rate depends primarily on the growth rate of the money supply.

According to the Phillips curve, unemployment and inflation are positively related in

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

The sacrifice ratio of the Volcker disinflation was larger than previous estimates had predicted.

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. Faced with the shift of the Phillips curve from PC₁ to PC₂, policymakers will

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. What is measured along the vertical axis of the right-hand graph?

Suppose a middle-class tax cut increases consumption expenditures. Which of the following would you expect to occur as a result of this change?

An increase in expected inflation shifts the

An adverse supply shock shifts the short-run Phillips curve right. If people raise their inflation expectations, the short-run Phillips curve shifts farther right.

In the long run an increase in the money supply growth rate affects

According to the Philips curve diagram, if a central bank takes action to reduce the inflation rate, unemployment is

List one specific policy that would shift the long-run Phillips curve to the right.

Which of the following leads to a lower level of unemployment in the long run?

A politician blames the Federal Reserve for being "soft on unemployment" and claims that a permanently higher money supply growth rate will lead to a permanent reduction in the unemployment rate. The politician's argument is

Samuelson and Solow argued that when unemployment is high,

Friedman and Phelps argued that

Which of the following scenarios is consistent with typical estimates of the sacrifice ratio?

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2. If the economy starts at C and 1, then in the short run, an increase in the money supply growth rate moves the economy to

If a central bank increases the money supply in response to an adverse supply shock, then which of the following quantities moves closer to its pre-shock value as a result?

In his famous article published in an economics journal in 1958, A.W. Phillips