Exam 38: Extending the Analysis of Aggregate Supply

Which action will tend to decrease aggregate supply, according to supply-side economists?

In the cost-push model of inflation, increases in nominal-wage rates that exceed increases in the productivity of labor

The policy implication of the long-run Phillips Curve is that, while stimulative policies may work to reduce unemployment in the short run, the only effect of such policies in the long run is to raise inflation.

Government can push the unemployment rate below the natural rate only by

The Laffer Curve suggests that within a certain range, lower tax rates will increase tax revenues.

Supply-side policies can be described in terms of the aggregate demand and aggregate supply model as an attempt to shift

As distinct from reductions in the price level, reductions in the rate of inflation are referred to as

The natural rate of unemployment

The experience of the United States with supply-side policies is that tax cuts affect the economy more on the demand side rather than the supply side.

Which of the following allegedly contributed to the stagflation in the mid-1970s?

In the last half of the 1990s, the usual short-run trade-off between inflation and unemployment did not arise because

The short-run aggregate supply curve

The short-run Phillips Curve intersects the long-run Phillips Curve at the

In the short run, output increases in response to a rising price level, but not in the long run.

Economist Arthur Laffer argued that Robin Hood and his men would

Rightward and upward shifts of the Phillips Curve in the 1970s and early 1980s were caused by

In terms of aggregate supply, a period in which nominal wages and other resource prices are unresponsive to price-level changes is called the

The short-run aggregate supply curve intersects the long-run aggregate supply curve at

The traditional Phillips Curve shows the

Inflation in the U.S.economy tends to be