Question 1

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

Accepted Answer

A) shifts both the long-run and the short-run Phillips curves right. 
B) shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C) shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D) None of the above is correct. 
A) shifts both the long-run and the short-run Phillips curves right. 
B) shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C) shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D) None of the above is correct.

Question 2

Suppose the price level is 110.00 at the end of 2020, 121.00 at the end of 2021, and 128.26 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

Accepted Answer

Yes. The rate of inflation for 2021 was

Question 3

From 2008-2009 the Federal Reserve created a very large increase in the money supply. According to the short-run Phillips curve this policy should have

Accepted Answer

A) raised inflation and unemployment. 
B) raised inflation and reduced unemployment. 
C) reduced inflation and raised unemployment. 
D) reduced inflation and unemployment. 
A) raised inflation and unemployment. 
B) raised inflation and reduced unemployment. 
C) reduced inflation and raised unemployment. 
D) reduced inflation and unemployment.

Question 4

If the Fed announced a policy to reduce inflation and people found it credible, the short-run Phillips curve would shift

Accepted Answer

A) right and the sacrifice ratio would fall. 
B) right and the sacrifice ratio would rise. 
C) left and the sacrifice ratio would fall. 
D) left and the sacrifice ratio would rise. 
A) right and the sacrifice ratio would fall. 
B) right and the sacrifice ratio would rise. 
C) left and the sacrifice ratio would fall. 
D) left and the sacrifice ratio would rise.

Question 5

If there is a favorable supply shock which direction does the short-run Phillips curve shift? What initially happens to unemployment and inflation as a result of this shock?

Accepted Answer

The short-run Philli

Question 6

Disinflation is a

Accepted Answer

A) reduction in the price level, whereas deflation is a reduction in the rate of inflation. 
B) reduction in the rate of inflation, whereas deflation is a reduction in the price level. 
C) slow reduction in the price level, whereas deflation is a rapid reduction in the price level. 
D) rapid reduction in the price level, whereas deflation is a slow reduction in the price level. 
A) reduction in the price level, whereas deflation is a reduction in the rate of inflation. 
B) reduction in the rate of inflation, whereas deflation is a reduction in the price level. 
C) slow reduction in the price level, whereas deflation is a rapid reduction in the price level. 
D) rapid reduction in the price level, whereas deflation is a slow reduction in the price level.

Question 7

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

Accepted Answer

A) moving to the left along the short-run Phillips curve. 
B) moving to the right along the short-run Phillips curve. 
C) shifting the short-run Phillips curve to the right. 
D) shifting the short-run Phillips curve to the left. 
A) moving to the left along the short-run Phillips curve. 
B) moving to the right along the short-run Phillips curve. 
C) shifting the short-run Phillips curve to the right. 
D) shifting the short-run Phillips curve to the left.

Question 8

The proliferation of Internet usage serves as an example of a favorable supply shock.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks?

Accepted Answer

A) People adjust their expectations of inflation rapidly. 
B) People believe policy announcements made by central bank officials. 
C) The short-run Phillips shifts rapidly. 
D) All of the above are correct. 
A) People adjust their expectations of inflation rapidly. 
B) People believe policy announcements made by central bank officials. 
C) The short-run Phillips shifts rapidly. 
D) All of the above are correct.

Question 10

A given short-run Phillips curve shows that an increase in the inflation rate will be accompanied by a lower unemployment rate in the short run.

Accepted Answer

A) True 
 B)False

Question 11

If the Federal Reserve increases the growth rate of the money supply, in the long run

Accepted Answer

A) inflation is higher and the unemployment rate is lower. 
B) inflation is higher while the unemployment rate is unchanged. 
C) inflation is unchanged while the unemployment rate is lower. 
D) None of the above is correct. 
A) inflation is higher and the unemployment rate is lower. 
B) inflation is higher while the unemployment rate is unchanged. 
C) inflation is unchanged while the unemployment rate is lower. 
D) None of the above is correct.

Question 12

Suppose that the Fed unexpectedly pursues contractionary monetary policy. What will happen to unemployment in the short run? What will happen to unemployment in the long run? Justify your answer using the Phillips curves.

Accepted Answer

In the short run, unemployment will rise

Question 13

Which of the following is correct if there is an adverse supply shock?

Accepted Answer

A) The short-run aggregate supply curve and the short-run Phillips curve both shift right. 
B) The short-run aggregate supply curve and the short-run Phillips curve both shift left. 
C) The short-run aggregate supply curve shifts right and the short-run Phillips curve shifts left. 
D) The short-run aggregate supply curve shifts left and the short-run Phillips curve shifts right. 
A) The short-run aggregate supply curve and the short-run Phillips curve both shift right. 
B) The short-run aggregate supply curve and the short-run Phillips curve both shift left. 
C) The short-run aggregate supply curve shifts right and the short-run Phillips curve shifts left. 
D) The short-run aggregate supply curve shifts left and the short-run Phillips curve shifts right.

Question 14

In 1980, the U.S. economy had an inflation rate of

Accepted Answer

A) about 1 percent and an unemployment rate of about 7 percent. 
B) less than 4 percent and an unemployment rate of less than 6 percent. 
C) less than 7 percent and an unemployment rate of about 9 percent. 
D) more than 9 percent and an unemployment rate of about 7 percent. 
A) about 1 percent and an unemployment rate of about 7 percent. 
B) less than 4 percent and an unemployment rate of less than 6 percent. 
C) less than 7 percent and an unemployment rate of about 9 percent. 
D) more than 9 percent and an unemployment rate of about 7 percent.

Question 15

A favorable supply shock shifts the short-run Phillips curve

Accepted Answer

A) right and inflation rises. 
B) right and inflation falls. 
C) left and inflation rises. 
D) left and inflation falls. 
A) right and inflation rises. 
B) right and inflation falls. 
C) left and inflation rises. 
D) left and inflation falls.

Question 16

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 taxes moves the economy to

Accepted Answer

A) B and 2. 
B) D and 3. 
C) E and 2. 
D) None of the above is correct. 
A) B and 2. 
B) D and 3. 
C) E and 2. 
D) None of the above is correct.

Question 17

If inflation expectations decline, then the short-run Phillips curve shifts

Accepted Answer

A) left, so that at any inflation rate unemployment is lower in the short run than before. 
B) right, so that at any inflation rate unemployment is lower in the short run than before. 
C) right, so that at any inflation rate unemployment is higher in the short run than before. 
D) left, so that at any inflation rate unemployment is higher in the short run than before. 
A) left, so that at any inflation rate unemployment is lower in the short run than before. 
B) right, so that at any inflation rate unemployment is lower in the short run than before. 
C) right, so that at any inflation rate unemployment is higher in the short run than before. 
D) left, so that at any inflation rate unemployment is higher in the short run than before.

Question 18

On a given short-run Phillips curve which of the following is not held constant?

Accepted Answer

A) the level of GDP 
B) the position of the aggregate-supply curve 
C) expected inflation 
D) the expected growth rate of the money supply 
A) the level of GDP 
B) the position of the aggregate-supply curve 
C) expected inflation 
D) the expected growth rate of the money supply

Question 19

By about 1973, U.S. policymakers had learned that

Accepted Answer

A) there is no trade-off between inflation and unemployment in the short run. 
B) there is no trade-off between inflation and unemployment in the long run. 
C) Friedman's analysis of inflation and unemployment had been correct, and Phelps's analysis of inflation and unemployment had been incorrect. 
D) Phelps's analysis of inflation and unemployment had been correct, and Friedman's analysis of inflation and unemployment had been incorrect. 
A) there is no trade-off between inflation and unemployment in the short run. 
B) there is no trade-off between inflation and unemployment in the long run. 
C) Friedman's analysis of inflation and unemployment had been correct, and Phelps's analysis of inflation and unemployment had been incorrect. 
D) Phelps's analysis of inflation and unemployment had been correct, and Friedman's analysis of inflation and unemployment had been incorrect.

Question 20

The large increase in oil prices in the 1970s was caused primarily by a(n)

Accepted Answer

A) increase in demand for oil. 
B) decrease in demand for oil. 
C) decrease in the supply of oil. 
D) increase in the supply of oil. 
A) increase in demand for oil. 
B) decrease in demand for oil. 
C) decrease in the supply of oil. 
D) increase in the supply of oil.

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

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

Suppose the price level is 110.00 at the end of 2020, 121.00 at the end of 2021, and 128.26 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

From 2008-2009 the Federal Reserve created a very large increase in the money supply. According to the short-run Phillips curve this policy should have

If the Fed announced a policy to reduce inflation and people found it credible, the short-run Phillips curve would shift

If there is a favorable supply shock which direction does the short-run Phillips curve shift? What initially happens to unemployment and inflation as a result of this shock?

Disinflation is a

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

The proliferation of Internet usage serves as an example of a favorable supply shock.

Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks?

A given short-run Phillips curve shows that an increase in the inflation rate will be accompanied by a lower unemployment rate in the short run.

If the Federal Reserve increases the growth rate of the money supply, in the long run

Suppose that the Fed unexpectedly pursues contractionary monetary policy. What will happen to unemployment in the short run? What will happen to unemployment in the long run? Justify your answer using the Phillips curves.

Which of the following is correct if there is an adverse supply shock?

In 1980, the U.S. economy had an inflation rate of

A favorable supply shock shifts the short-run Phillips curve

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 taxes moves the economy to

If inflation expectations decline, then the short-run Phillips curve shifts

On a given short-run Phillips curve which of the following is not held constant?

By about 1973, U.S. policymakers had learned that

The large increase in oil prices in the 1970s was caused primarily by a(n)

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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