Question 1

The basic aggregate supply equation implies that output exceeds natural output when the price level is:

Accepted Answer

A) low. 
B) high. 
C) less than the expected price level. 
D) greater than the expected price level. 
A) low. 
B) high. 
C) less than the expected price level. 
D) greater than the expected price level.

Question 2

How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.

Accepted Answer

​ @#IMG-DLM& ​
An adverse supply shock (ν) would s

Question 3

Advocates of the rational-expectations approach predict that a credible policy to lower inflation will result in a loss of output that is _____ than expected based on the sacrifice ratio.

Accepted Answer

A) larger 
B) smaller 
C) the same 
D) sometimes larger and sometimes slower 
A) larger 
B) smaller 
C) the same 
D) sometimes larger and sometimes slower

Question 4

The NAIRU is the:

Accepted Answer

A) North American institutional rate of unemployment. 
B) natural aggregate investment return on utilization. 
C) nonaccelerating inflation rate of unemployment. 
D) normal American inelastic rate of unemployment. 
A) North American institutional rate of unemployment. 
B) natural aggregate investment return on utilization. 
C) nonaccelerating inflation rate of unemployment. 
D) normal American inelastic rate of unemployment.

Question 5

Assume that an economy is initially at the natural rate of unemployment.
a.Use a Phillips curve diagram to illustrate graphically how the inflation rate and unemployment rate respond both in the short run and in the long run to an unexpected expansionary monetary policy.
b.Use a Phillips curve diagram to illustrate graphically how the inflation rate and unemployment rate respond both in the short run and in the long run to the announcement of a credible plan of expansionary monetary policy when people have rational expectations.

Accepted Answer

a.The sacrifice ratio is the percentage

Question 6

The government can lower inflation with a low sacrifice ratio if the:

Accepted Answer

A) money supply is reduced slowly. 
B) public has adaptive expectations. 
C) short-run aggregate supply schedule is relatively flat. 
D) public rationally believe that policymakers are committed to reducing inflation. 
A) money supply is reduced slowly. 
B) public has adaptive expectations. 
C) short-run aggregate supply schedule is relatively flat. 
D) public rationally believe that policymakers are committed to reducing inflation.

Question 7

The short-run Phillips curve:

Accepted Answer

A) shifts upward if expected inflation increases. 
B) shifts upward if expected inflation decreases. 
C) shifts downward if expected inflation increases. 
D) is vertical. 
A) shifts upward if expected inflation increases. 
B) shifts upward if expected inflation decreases. 
C) shifts downward if expected inflation increases. 
D) is vertical.

Question 8

According to the natural-rate hypothesis, fluctuations in aggregate demand affect output in:

Accepted Answer

A) both the short run and the long run. 
B) only in the short run. 
C) only in the long run. 
D) in neither the short run nor the long run. 
A) both the short run and the long run. 
B) only in the short run. 
C) only in the long run. 
D) in neither the short run nor the long run.

The basic aggregate supply equation implies that output exceeds natural output when the price level is:

How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.

Advocates of the rational-expectations approach predict that a credible policy to lower inflation will result in a loss of output that is _____ than expected based on the sacrifice ratio.

The NAIRU is the:

The government can lower inflation with a low sacrifice ratio if the:

The short-run Phillips curve:

According to the natural-rate hypothesis, fluctuations in aggregate demand affect output in:

The Science of Macroeconomics

The Data of Microeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

A Dynamic Model of Economic Fluctuations

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

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Exam 14: Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

The basic aggregate supply equation implies that output exceeds natural output when the price level is:

How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.

Advocates of the rational-expectations approach predict that a credible policy to lower inflation will result in a loss of output that is _____ than expected based on the sacrifice ratio.

The NAIRU is the:

The government can lower inflation with a low sacrifice ratio if the:

The short-run Phillips curve:

According to the natural-rate hypothesis, fluctuations in aggregate demand affect output in:

The Science of Macroeconomics

The Data of Microeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

A Dynamic Model of Economic Fluctuations

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

Filters