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

If a central bank reduces inflation 2 percentage points and this makes output fall 3 percentage points and unemployment rise 5 percentage points for one year, the sacrifice ratio is

In the long run, which of the following would shift the long-run Phillips curve to the right?

If the Federal Reserve increases the growth rate of the money supply, in the long run

In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?

Suppose that the Fed unexpectedly pursues contractionary monetary policy. What will happen to unemployment in the short run? What will happen to unemployment in the long run? Justify your answer using the Phillips curves.

Considering a plot of the inflation rate and the unemployment rate, one might conjecture that the short run Phillips curve was further to the right in the first part of the 2000's than it was in the last part of the 1990s and 2000.

If policymakers increase aggregate demand, then in the short run the price level

According to Friedman and Phelps, the unemployment rate

A policy change that changes the natural rate of unemployment changes

An increase in the inflation rate permanently reduces the natural rate of unemployment.

An economist working for the Central Bank of Fredonia estimates a Phillips curve for Fredonia and reports the following points on the estimated curve. actual inflation rate unemplayment rate 5\% 4\% 4\% 4.5\% 3\% 5\% 2\% 5.5\% Which of the following statements is correct?

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

In 2001, Congress and President Bush instituted tax cuts. According to the short-run Phillips curve, in the short run this change should have

According to Friedman and Phelps, policymakers face a tradeoff between inflation and unemployment

If monetary policy moves unemployment below its natural rate, both expected and actual inflation will rise.

In the United States during the 1970s, expected inflation

The economist A.W. Phillips published a famous article in 1958 in which he showed a

In the long run, the inflation rate depends primarily on the growth rate of the money supply.

Which of the following is downward-sloping?

If people anticipate higher inflation, but inflation remains the same then