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

During the financial crisis Congress and President Obama authorized tax cuts and increases in government spending. According to the Phillips curve, in the short run these policies should have

Which of the following would not be associated with a favorable supply shock?

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7. The economy would move from 3 to 5

Suppose the economy is currently experiencing 9% inflation per year. If the Fed wants to reduce inflation to 3% and the sacrifice ratio is 4, then how much annual output must be sacrificed in the transition?

A central bank raises the money supply growth rate and keeps it at that higher rate. Explain the process by which the economy moves to long-run equilibrium.

Most economists believe that a tradeoff between inflation and unemployment exists

In 2009 Congress and President Obama approved tax cuts and increased government spending. According to the short-run Phillips curve these policies should have

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. Assume the figure charts possible outcomes for the year 2018. In 2018, the economy is at point B on the left-hand graph, which corresponds to point B on the right-hand graph. Also, point A on the left-hand graph corresponds to A on the right-hand graph. The price level in the year 2018 is

In the long run, a decrease in the money supply growth rate

How does a central bank's accommodation of an adverse supply shock change the long-run results of the shock?

An economy has a current inflation rate of 7%. If the central bank wants to reduce inflation to 4% and the sacrifice ratio is 2, then how much annual output must be sacrificed in the transition?

In the long run, a decrease in the money supply growth rate

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, a decrease in taxes moves the economy to

Which of the following is not correct?

Which of the following both make the sacrifice ratio higher than otherwise?

If policymakers expand aggregate demand, then in the long run

Data for the United States traced out an almost perfect Phillips curve for much of the

A favorable supply shock causes output to

Assuming that rational expectations theory does not hold, if a central banks attempts to reduce the inflation rate what happens to the unemployment rate in the short-run?

If prices and wages adjusted rapidly and producers could quickly distinguish the difference between a change in the price level and a change in the relative price of their products, then an increase in the money supply growth rate would have at most a very short-lived affect on unemployment.