Exam 13: Unemployment and Inflation

The Lucas critique is an objection to the assumption that

According to the expectations-augmented Phillips curve, if macroeconomic policy succeeds in reducing inflation below its expected rate, unemployment will

The main determinant of how quickly expected inflation adjusts to changes in monetary policy is

Some economists argue that Okun's Law overstates the cost of cyclical unemployment because

Describe the major costs of inflation, being sure to distinguish between anticipated and unanticipated inflation.

When actual inflation is greater than expected inflation,

Both classicals and Keynesians agree that policymakers

The Phillips curve appeared to fit the data well for Canada in the

Examining data on cyclical unemployment plotted against unanticipated inflation shows

The argument that when policy changes, people's behaviour changes so that historical relationships between macroeconomic variables will no longer hold is known as

One cost of a perfectly anticipated inflation is that it

In the extended classical model, an anticipated increase in the money supply would cause output to ________ and the price level to ________ in the short run.

The negative relationship between unemployment and inflation is known as the

If the expected inflation rate is unchanged, a rise in the natural rate of unemployment would

Suppose most people had anticipated that inflation would increase by 10% in the coming year because the Central Bank would increase the money supply by 10%. Instead, the Central Bank increases the money supply by only 5%. In the short run, this would cause actual output to be ________ full-employment output and prices to increase by ________ 5%.

A rapid and decisive reduction in the rate of growth of the money supply for the purpose of disinflation is called

A high-pressure economy is one in which

Shoe leather costs refer to

Countries in which the government heavily regulates the labour market are likely to have ________ sacrifice ratio.

The Friedman-Phelps analysis suggests that there is a long-term relationship between