Exam 33: The Trade-Off Between Inflation and Unemployment

Demand-side inflation differs from supply-side inflation in which of the following ways?

If the favorable supply shocks of the 1990s were reversed in the future, we should expect a(n)

Reducing aggregate demand to fight inflation will cause higher unemployment.

If actual inflation differs from expected inflation, what is the slope of the aggregate supply curve?

According to the theory of rational expectations, the government can influence output

If aggregate demand in the United States had grown more slowly than it actually did in 2010, the

An increase in the price of foreign oil can shift the economy's aggregate supply curve _____ resulting in inflation.

If expectations are "rational," can the Fed control unemployment?

If an economy's resources are fully employed,

According to the theory of rational expectations, errors in predicting inflation will

If business fluctuations are from demand-side forces,

In 2010, dissenters were worried that the effects of policies to reduce unemployment would create the conditions for

When the Phillips curve was first formulated (late 1960s), many economists thought that it showed a

If the fluctuations in the economy's real growth rate from year to year are caused primarily by variations in the rate at which aggregate demand increases, then data would show

Figure 33-8 In Figure 33-8, which of the following movements would you associate with a "negative supply shock"?

In the face of the 2007-2009 recession, the President, Congress, and the Fed

Figure 33-4 Which panel in Figure 33-4 shows the movement associated with a demand-side inflation?

Along a short-run Phillips curve, a higher rate of inflation is associated with a lower unemployment rate.

Based on the evidence, most economists believe that the self-correcting mechanism operates

If employees and employers always accurately predict inflation, what is the shape of the Phillips curve?