Exam 30: Inflation Expectations and Stabilization Policies

According to the simple Phillips curve, when unemployment is _____, then inflation is:

The examination of inflation and unemployment data from the United States from 1960 through 2016 indicates that the simple Phillips curve:

The graph below shows the relationship between the rate of inflation and the rate of unemployment. Inflation tends to be higher when the unemployment rate is lower. Which model is it?

The negative relationship between inflation and unemployment occurs when:

When will the economy be at a point on the expectations-augmented Phillips curve that has a high unemployment rate?

An important lesson from the Lucas critique that policymakers need to heed is that policy will have its desired impact when policymakers:

Use the expectations-augmented Phillips curve to explain why policy credibility is important.

When inflation expectations are stable, the Phillips curve:

A mistaken assumption about the simple Phillips curve is to assume that it:

A major flaw in the development of the simple Phillips curve is that it fails to account for the fact that:

What movement would occur on an economy's simple Phillips curve when the economy's aggregate demand curve shifts to the right? There would be a movement to a _____ point on the curve with:

If the natural rate hypothesis is accepted, then the Phillips curve would:

Which of the following is NOT consistent with the rational expectations hypothesis?

In the self-correction and the long-run Phillips curve, at point b actual inflation (4%) is above expected inflation (0%). Then inflation expectations will start to rise, and the Phillips curve will shift upward, moving the economy to point c. According to the natural rate hypothesis, there is _____ between inflation and unemployment, and thus the long-run Phillips curve is _____.

The term "inflation expectations" refers to the:

What lowers unemployment?

(Figure: Demand Shock 0) 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 statements is consistent with the adaptive expectations view?

According to the natural rate hypothesis, there is:

According to the expectations-augmented Phillips curve, when unexpected inflation is negative, unemployment will be: