Question 1

Figure 16-4
  
-Refer to the Figure 16-4. Along LRPC, what is the expected rate of inflation?

Accepted Answer

A)  0 percent 
B)  the actual rate of inflation 
C)  3 percent 
D)  the natural rate of inflation 
A)  0 percent 
B)  the actual rate of inflation 
C)  3 percent 
D)  the natural rate of inflation

Question 2

Figure 16-1
  
-Refer to 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?

Accepted Answer

A)  a and 1 
B)  b and 2 
C)  c and 3 
D)  a and 3 
A)  a and 1 
B)  b and 2 
C)  c and 3 
D)  a and 3

Question 3

Figure 16-4
  
-Refer to the Figure 16-4. At point b, how do actual and expected inflation rates and unemployment rates compare?

Accepted Answer

A)  The actual inflation rate is less than the expected inflation rate, and the actual rate of unemployment exceeds the natural rate of unemployment. 
B)  The actual inflation rate is greater than the expected inflation rate, and the actual rate of unemployment exceeds the natural rate of unemployment. 
C)  The actual inflation rate is less than the expected inflation rate, and the actual rate of unemployment is less than the natural rate of unemployment. 
D)  The actual inflation rate is greater than the expected inflation rate, and the actual rate of unemployment is less than the natural rate of unemployment. 
A)  The actual inflation rate is less than the expected inflation rate, and the actual rate of unemployment exceeds the natural rate of unemployment. 
B)  The actual inflation rate is greater than the expected inflation rate, and the actual rate of unemployment exceeds the natural rate of unemployment. 
C)  The actual inflation rate is less than the expected inflation rate, and the actual rate of unemployment is less than the natural rate of unemployment. 
D)  The actual inflation rate is greater than the expected inflation rate, and the actual rate of unemployment is less than the natural rate of unemployment.

Question 4

How will an adverse supply shock shift the short-run aggregate-supply curve, and what will be the effect on prices?

Accepted Answer

A)  It will shift the short-run aggregate-supply curve right, making prices rise. 
B)  It will shift the short-run aggregate-supply curve left, making prices rise. 
C)  It will shift the short-run aggregate-supply curve right, making prices fall. 
D)  It will shift the short-run aggregate-supply curve left, making prices fall. 
A)  It will shift the short-run aggregate-supply curve right, making prices rise. 
B)  It will shift the short-run aggregate-supply curve left, making prices rise. 
C)  It will shift the short-run aggregate-supply curve right, making prices fall. 
D)  It will shift the short-run aggregate-supply curve left, making prices fall.

Question 5

Figure 16-4
  
-Refer to the Figure 16-4. At point m, how do actual and expected inflation rates and unemployment rates compare?

Accepted Answer

A)  The actual inflation rate exceeds the expected inflation rate and the actual unemployment rate exceeds the natural rate of unemployment. 
B)  The actual inflation rate exceeds the expected inflation rate and the actual unemployment rate is less than the natural rate of unemployment. 
C)  The actual inflation rate is less than the expected inflation rate and the actual unemployment rate exceeds the natural rate of unemployment. 
D)  The actual inflation rate is less than the expected inflation rate and the actual unemployment rate is less than the natural rate of unemployment. 
A)  The actual inflation rate exceeds the expected inflation rate and the actual unemployment rate exceeds the natural rate of unemployment. 
B)  The actual inflation rate exceeds the expected inflation rate and the actual unemployment rate is less than the natural rate of unemployment. 
C)  The actual inflation rate is less than the expected inflation rate and the actual unemployment rate exceeds the natural rate of unemployment. 
D)  The actual inflation rate is less than the expected inflation rate and the actual unemployment rate is less than the natural rate of unemployment.

Question 6

Short-run outcomes in the economy can be expressed in terms of output and the price level, or in terms of unemployment and inflation.

Accepted Answer

A) True 
 B)False

Question 7

What did Friedman and Phelps argue about the relationship between inflation and unemployment?

Accepted Answer

A)  The inflation rate is related to unemployment in the long-run. 
B)  The inflation rate is unrelated to unemployment in the long-run. 
C)  The inflation rate is related to unemployment in the short-run. 
D)  The inflation rate is unrelated to unemployment in the short-run. 
A)  The inflation rate is related to unemployment in the long-run. 
B)  The inflation rate is unrelated to unemployment in the long-run. 
C)  The inflation rate is related to unemployment in the short-run. 
D)  The inflation rate is unrelated to unemployment in the short-run.

Question 8

A decrease in expected inflation shifts which of the following curves, and in what direction?

Accepted Answer

A)  It shifts the short-run Phillips curve right. 
B)  It shifts the short-run Phillips curve left. 
C)  It shifts the long-run Phillips curve right. 
D)  It shifts the long-run Phillips curve left. 
A)  It shifts the short-run Phillips curve right. 
B)  It shifts the short-run Phillips curve left. 
C)  It shifts the long-run Phillips curve right. 
D)  It shifts the long-run Phillips curve left.

Question 9

Suppose the minimum wage decreased. At any given rate of inflation, what would happen to output and employment?

Accepted Answer

A)  Both output and employment would be higher. 
B)  Both output and employment would be lower. 
C)  Output would be higher and unemployment would be lower. 
D)  Unemployment would be higher and output would be lower. 
A)  Both output and employment would be higher. 
B)  Both output and employment would be lower. 
C)  Output would be higher and unemployment would be lower. 
D)  Unemployment would be higher and output would be lower.

Question 10

What is the misery index supposed to measure?

Accepted Answer

A)  the market power of unions 
B)  the health of the economy 
C)  the degree of inequality 
D)  the standard of living 
A)  the market power of unions 
B)  the health of the economy 
C)  the degree of inequality 
D)  the standard of living

Question 11

In the long run, what effect does an increase in the money supply have on prices and unemployment?

Accepted Answer

A)  It leaves prices and unemployment unchanged. 
B)  It lowers prices and unemployment. 
C)  It raises prices and leaves unemployment unchanged. 
D)  It leaves prices unchanged and reduces unemployment. 
A)  It leaves prices and unemployment unchanged. 
B)  It lowers prices and unemployment. 
C)  It raises prices and leaves unemployment unchanged. 
D)  It leaves prices unchanged and reduces unemployment.

Question 12

Figure 16-2
  
-Refer to the Figure 16-2. If the economy starts at c and the money supply growth rate increases, where does the economy move to in the long run?

Accepted Answer

A)  b 
B)  d 
C)  e 
D)  a 
A)  b 
B)  d 
C)  e 
D)  a

Question 13

Figure 16-4
  
-Refer to the Figure 16-4. Along SRPC3, what is the expected rate of inflation?

Accepted Answer

A)  0 percent 
B)  2 percent 
C)  3 percent 
D)  5 percent 
A)  0 percent 
B)  2 percent 
C)  3 percent 
D)  5 percent

Question 14

Suppose the government passes legislation that decreases the natural rate of unemployment. How does this change the long- and short-run Phillips curves?

Accepted Answer

For the long-run Phillips curve, the cha

Question 15

How were inflation and unemployment from 1980 to 1989 in Canada?

Accepted Answer

A)  Inflation was relatively low, and there were no fluctuations in unemployment. 
B)  Inflation was relatively low, and unemployment was high. 
C)  Unemployment was relatively low, but there were large fluctuations in inflation. 
D)  There were relatively large fluctuations in both unemployment and inflation. 
A)  Inflation was relatively low, and there were no fluctuations in unemployment. 
B)  Inflation was relatively low, and unemployment was high. 
C)  Unemployment was relatively low, but there were large fluctuations in inflation. 
D)  There were relatively large fluctuations in both unemployment and inflation.

Question 16

What is the effect of an adverse supply shock?

Accepted Answer

A)  The long-run aggregate supply curve shifts to the left. 
B)  The short-run aggregate supply curve shifts to the right. 
C)  The long-run Phillips curve shifts to the left. 
D)  The short-run Phillips curve shifts to the right. 
A)  The long-run aggregate supply curve shifts to the left. 
B)  The short-run aggregate supply curve shifts to the right. 
C)  The long-run Phillips curve shifts to the left. 
D)  The short-run Phillips curve shifts to the right.

Question 17

If the government raises government expenditures, what happens to prices and unemployment in the short run?

Accepted Answer

A)  Prices rise and unemployment falls. 
B)  Prices fall and unemployment rises. 
C)  Prices and unemployment rise. 
D)  Prices and unemployment fall. 
A)  Prices rise and unemployment falls. 
B)  Prices fall and unemployment rises. 
C)  Prices and unemployment rise. 
D)  Prices and unemployment fall.

Question 18

If the short-run Phillips curve were stable, what would be unusual?

Accepted Answer

A)  an increase in inflation and an increase in output 
B)  a decrease in inflation and an increase in unemployment 
C)  an increase in both inflation and unemployment 
D)  an increase in output and a decrease in unemployment 
A)  an increase in inflation and an increase in output 
B)  a decrease in inflation and an increase in unemployment 
C)  an increase in both inflation and unemployment 
D)  an increase in output and a decrease in unemployment

Question 19

How could we transform the AD-AS model such that, instead of the price level and output it would show the relationship between the inflation rate (ð) and the rate of output growth (g)?

Accepted Answer

One can start from the AD-AS model in th

Question 20

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

Accepted Answer

A)  It shifts both the short-run and long-run Phillips curves to the right. 
B)  It shifts both the short-run and long-run Phillips curves to the left. 
C)  It will shift the short-run aggregate-supply curve to the right and the long-run Phillips curve to the left. 
D)  It will shift the short-run aggregate-supply curve to the right and leave the long-run Phillips curve unaffected. 
A)  It shifts both the short-run and long-run Phillips curves to the right. 
B)  It shifts both the short-run and long-run Phillips curves to the left. 
C)  It will shift the short-run aggregate-supply curve to the right and the long-run Phillips curve to the left. 
D)  It will shift the short-run aggregate-supply curve to the right and leave the long-run Phillips curve unaffected.

Figure 16-4 -Refer to the Figure 16-4. Along LRPC, what is the expected rate of inflation?

Figure 16-1 -Refer to 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?

Figure 16-4 -Refer to the Figure 16-4. At point b, how do actual and expected inflation rates and unemployment rates compare?

How will an adverse supply shock shift the short-run aggregate-supply curve, and what will be the effect on prices?

Figure 16-4 -Refer to the Figure 16-4. At point m, how do actual and expected inflation rates and unemployment rates compare?

Short-run outcomes in the economy can be expressed in terms of output and the price level, or in terms of unemployment and inflation.

What did Friedman and Phelps argue about the relationship between inflation and unemployment?

A decrease in expected inflation shifts which of the following curves, and in what direction?

Suppose the minimum wage decreased. At any given rate of inflation, what would happen to output and employment?

What is the misery index supposed to measure?

In the long run, what effect does an increase in the money supply have on prices and unemployment?

Figure 16-2 -Refer to the Figure 16-2. If the economy starts at c and the money supply growth rate increases, where does the economy move to in the long run?

Figure 16-4 -Refer to the Figure 16-4. Along SRPC3, what is the expected rate of inflation?

Suppose the government passes legislation that decreases the natural rate of unemployment. How does this change the long- and short-run Phillips curves?

How were inflation and unemployment from 1980 to 1989 in Canada?

What is the effect of an adverse supply shock?

If the government raises government expenditures, what happens to prices and unemployment in the short run?

If the short-run Phillips curve were stable, what would be unusual?

How could we transform the AD-AS model such that, instead of the price level and output it would show the relationship between the inflation rate (ð) and the rate of output growth (g)?

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

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Five Debates Over Macroeconomic Policy

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

Figure 16-4 -Refer to the Figure 16-4. Along LRPC, what is the expected rate of inflation?

Figure 16-1 -Refer to 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?

Figure 16-4 -Refer to the Figure 16-4. At point b, how do actual and expected inflation rates and unemployment rates compare?

How will an adverse supply shock shift the short-run aggregate-supply curve, and what will be the effect on prices?

Figure 16-4 -Refer to the Figure 16-4. At point m, how do actual and expected inflation rates and unemployment rates compare?

Short-run outcomes in the economy can be expressed in terms of output and the price level, or in terms of unemployment and inflation.

What did Friedman and Phelps argue about the relationship between inflation and unemployment?

A decrease in expected inflation shifts which of the following curves, and in what direction?

Suppose the minimum wage decreased. At any given rate of inflation, what would happen to output and employment?

What is the misery index supposed to measure?

In the long run, what effect does an increase in the money supply have on prices and unemployment?

Figure 16-2 -Refer to the Figure 16-2. If the economy starts at c and the money supply growth rate increases, where does the economy move to in the long run?

Figure 16-4 -Refer to the Figure 16-4. Along SRPC3, what is the expected rate of inflation?

Suppose the government passes legislation that decreases the natural rate of unemployment. How does this change the long- and short-run Phillips curves?

How were inflation and unemployment from 1980 to 1989 in Canada?

What is the effect of an adverse supply shock?

If the government raises government expenditures, what happens to prices and unemployment in the short run?

If the short-run Phillips curve were stable, what would be unusual?

How could we transform the AD-AS model such that, instead of the price level and output it would show the relationship between the inflation rate (ð) and the rate of output growth (g)?

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

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Five Debates Over Macroeconomic Policy

Filters