Exam 30: Inflation Expectations and Stabilization Policies

If people believe that the central bank will achieve its target rate of inflation, then unemployment is likely to move to:

Rising wages and business expenses tend to cause _____ inflation expectations, which shifts the:

Marcela earned a C in ECON 101. She predicts that she will earn a B in ECON 102 next semester because she will be taking fewer credit hours and she will have a new tutor. Marcela's prediction is consistent with _____ expectations.

According to the Fisher effect, which of the following inflation rates affects interest rates?

The graphs below show the simplified Phillips curves in the United States, between 1960 and 2016. The data in Panel B for the period between 1970 and 2016 shows:

Which of the following is NOT a reason that the Great Recession of 2007 to 2009 seemed consistent with the simple Phillips curve?

(Figure: Demand Shock A) When the economy moves from A to B, as shown in the graph on the left, how will inflation and the unemployment rate be affected, as shown in the graph on the right?

Which of the following is NOT a typical cause for the Phillips curve to shift?

Describe the connection between the natural rate hypothesis and the Phillips curve.

A negative relationship between inflation and unemployment would NOT be shown by:

According to the simple Phillips curve, in the short run, if inflation rises, then:

How can the natural rate of unemployment be identified on the expectations-augmented Phillips curve? It is the unemployment rate associated with _____ unexpected inflation.

Why will business firms lay off workers if the actual inflation rate ends up being lower than was expected?

How well does data from the United States support the simple Phillips curve model since 1960?

In 1997, the British government suddenly announced that the central bank, the Bank of England, would become independent. Evidence shows that the public immediately began to expect lower inflation. This behavior in forming expectations is consistent with _____ expectations.

The United States economy behaved according to the simple Phillips curve from _____ and did not follow that pattern from:

In the short run, higher than expected inflation puts _____ pressure on real wages and real rents, which leads businesses to _____ hiring.

The short-run aggregate supply curve will shift to the left when:

The Lucas critique noted that:

Which of the following statements is consistent with the Lucas critique?