Exam 16: The Short-Run Tradeoff between Inflation and Unemployment

Suppose the natural rate of unemployment is 6 percent,the expected inflation is 2 percent,and the constant a in the short-run Phillips curve equation is 0.8.Draw the long-run and short-run Phillips curves.What is the inflation rate corresponding to the intersection of the two curves?

What will a favourable supply shock cause the price level and output to do?

Figure 16-3 -Refer to the Figure 16-3.When would the economy move from c and 3 to b and 2?

Figure 16-2 -Refer to the Figure 16-2.What is Curve 1?

How does the short-run Phillips curve reflect an increase in the price of oil as the one in the early 1970s?

In 1980,what was the Canadian inflation rate and unemployment rate?

Which of the following would we NOT expect to happen if government policy moved the economy up along a given short-run Phillips curve?

Which of the following hypotheses is supported by the economic experience of Canada during the late 1960s and early 1970s?

If policymakers reduce aggregate demand,what happens to inflation and unemployment?

Figure 16-1 -Refer to the figure Figure 16-1.If the economy starts at c and 1,then in the short run,where does an increase in the money supply move the economy?

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

In the Friedman-Phelps analysis,when inflation is less than expected,unemployment is greater than the natural rate.

Which of the following best describes the sacrifice ratio for Canada?

Which of the following best characterizes the theory of rational expectations?

Who is a leading economist in the theory of rational expectations?

In the long run,people come to expect whatever inflation rate the Bank of Canada chooses to produce,so unemployment returns to its natural rate.

In 1980,how did the Canadian misery index compare to the average?

In the short run,policy that decreases the aggregate demand also decreases which of the following?

If policymakers expand aggregate demand,what happens to inflation and unemployment?

If technological change shifts the long-run aggregate-supply curve to the right,it will also do which of the following?