Exam 22: The Short-Run Trade-Off Between Inflation and Unemployment

If people believe that the central bank is going to reduce inflation

Which of the following is not correct?

In the late 1960s, economist Edmund Phelps published a paper that

Friedman argued that the Fed could use monetary policy to peg

The large increase in oil prices in the 1970s was caused primarily by a(n)

The natural rate of unemployment is the same as the socially optimal rate of unemployment.

Figure 22-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate. -Refer to Figure 22-1. Assuming the price level in the previous year was 100, point G on the right-hand graph corresponds to

In responding to the Phillips curve hypothesis, Friedman argued that the Fed can peg the

Other things the same, in the long run a country that reduces the minimum wage from very high levels will have

According to the short-run Phillips curve, if the central bank increases the money supply, then

Suppose a central bank announced that it was going to make a serious effort to fight inflation. A few years later the inflation rate is lower, but there had been a serious recession. We could conclude with certainty that

If the government reduced the minimum wage and pursued expansionary monetary policy, then in the long run

The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the

In the nineteenth century, some countries were on a gold standard so that on average the money supply growth rate was close to zero and expected inflation was more or less constant. For these countries during this time period, we find that increases in actual inflation were generally associated with falling unemployment. These findings

Figure 22-6 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 22-6. Starting from C and 3, in the long run, an increase in money supply growth moves the economy to

Which of the following is correct if there is a favorable supply shock?

Figure 22-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate. -Refer to Figure 22-1. What is measured along the vertical axis of the right-hand graph?

Figure 22-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate. -Refer to Figure 22-1. Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2012, and those two points correspond to points B and C, respectively, on the left-hand graph. Also suppose we know that the price index equaled 120 in 2011. Then the numbers 115 and 130 on the vertical axis of the left-hand graph would have to be replaced by

If inflation expectations decline, then the short-run Phillips curve shifts

Suppose that the money supply increases. In the short run, this increases prices according to