Question 1

In the early 1970s, the short-run Phillips curve shifted

Accepted Answer

A) right as inflation expectations rose. 
B) right as inflation expectations fell. 
C) left as inflation expectations rose. 
D) left as inflation expectations fell. 
A) right as inflation expectations rose. 
B) right as inflation expectations fell. 
C) left as inflation expectations rose. 
D) left as inflation expectations fell.

Question 2

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

Accepted Answer

A) lowers both inflation and unemployment. 
B) lowers inflation but raises unemployment. 
C) raises inflation but lowers unemployment. 
D) raises both inflation and unemployment. 
A) lowers both inflation and unemployment. 
B) lowers inflation but raises unemployment. 
C) raises inflation but lowers unemployment. 
D) raises both inflation and unemployment.

Question 3

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

Accepted Answer

A) True 
 B)False

Question 4

An adverse supply shock causes output to

Accepted Answer

A) rise. To counter this a central bank would increase the money supply. 
B) rise. To counter this a central bank would decrease the money supply. 
C) fall. To counter this a central bank would increase the money supply. 
D) fall. To counter this a central bank would decrease the money supply. 
A) rise. To counter this a central bank would increase the money supply. 
B) rise. To counter this a central bank would decrease the money supply. 
C) fall. To counter this a central bank would increase the money supply. 
D) fall. To counter this a central bank would decrease the money supply.

Question 5

Figure 22-8. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."  
-Refer to Figure 22-8. A movement of the economy from point A to point B, and at the same time a movement from point C to point D, would be described as

Accepted Answer

A) the outcome of a favorable supply shock. 
B) falling inflation. 
C) stagflation. 
D) All of the above are correct. 
A) the outcome of a favorable supply shock. 
B) falling inflation. 
C) stagflation. 
D) All of the above are correct.

Question 6

The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy.
-Refer to the Economy in 2008. The effects of increased prices of world commodities is shown by shifting

Accepted Answer

A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left. 
A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

In the long run, a decrease in the money supply growth rate

Accepted Answer

A) shifts both the long-run and the short-run Phillips curves right. 
B) shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C) shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D) None of the above is correct. 
A) shifts both the long-run and the short-run Phillips curves right. 
B) shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C) shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D) None of the above is correct.

Question 9

From 2008-2009 the Federal Reserve created a very large increase in the money supply. According to the short-run Phillips curve this policy should have

Accepted Answer

A) raised inflation and unemployment. 
B) raised inflation and reduced unemployment. 
C) reduced inflation and raised unemployment. 
D) reduced inflation and unemployment. 
A) raised inflation and unemployment. 
B) raised inflation and reduced unemployment. 
C) reduced inflation and raised unemployment. 
D) reduced inflation and unemployment.

Question 10

The monetary-policy framework called inflation targeting is used explicitly by

Accepted Answer

A) no major country. 
B) most major countries except the United States and Japan. 
C) the United States, but it is not used by other major countries. 
D) most major countries, including the United States and Japan. 
A) no major country. 
B) most major countries except the United States and Japan. 
C) the United States, but it is not used by other major countries. 
D) most major countries, including the United States and Japan.

Question 11

Country A's long-run Phillips curve is farther to the right than country B's. Country A and country B are identical in all other ways. In particular, they have the same money supply growth rates. In the long run as compared to country B country A will have

Accepted Answer

A) higher unemployment and higher inflation. 
B) higher unemployment and the same rate of inflation. 
C) lower unemployment and higher inflation. 
D) None of the above is correct. 
A) higher unemployment and higher inflation. 
B) higher unemployment and the same rate of inflation. 
C) lower unemployment and higher inflation. 
D) None of the above is correct.

Question 12

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 F on the right-hand graph corresponds to

Accepted Answer

A) point A on the left-hand graph. 
B) point B on the left-hand graph. 
C) point C on the left-hand graph. 
D) point D on the left-hand graph. 
A) point A on the left-hand graph. 
B) point B on the left-hand graph. 
C) point C on the left-hand graph. 
D) point D on the left-hand graph.

Question 13

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain.

Accepted Answer

Consider what happens when the aggregate

Question 14

Monetary Policy in Southland
In Southland the Department of Finance is responsible for monetary policy. Southland has had an inflation rate of 25% for many years.
-Refer to Monetary Policy in Southland. Suppose that the Southland Department of Finance undertakes a public relations campaign to convince people that it will soon change monetary policy to reduce inflation to 12.5%. If Southlanders believe their government then which, if any, curve(s) shift left?

Accepted Answer

A) the short-run and the long-run Phillips curve 
B) the short-run but not the long run Phillips curve 
C) the long-run but not the short-run Phillips curve 
D) neither the short-run nor the long-run Phillips curve 
A) the short-run and the long-run Phillips curve 
B) the short-run but not the long run Phillips curve 
C) the long-run but not the short-run Phillips curve 
D) neither the short-run nor the long-run Phillips curve

Question 15

The misery index is supposed to measure the

Accepted Answer

A) social cost of unemployment. 
B) health of the economy. 
C) lost output associated with a particular unemployment rate. 
D) short-run tradeoff between inflation and unemployment. 
A) social cost of unemployment. 
B) health of the economy. 
C) lost output associated with a particular unemployment rate. 
D) short-run tradeoff between inflation and unemployment.

Question 16

Friedman argued that the Fed could use monetary policy to peg

Accepted Answer

A) nominal exchange rates. 
B) the level of real GDP. 
C) the rate of unemployment. 
D) None of the above is correct. 
A) nominal exchange rates. 
B) the level of real GDP. 
C) the rate of unemployment. 
D) None of the above is correct.

Question 17

One determinant of the long-run average unemployment rate is the

Accepted Answer

A) market power of unions, while the inflation rate depends primarily upon government spending. 
B) minimum wage, while the inflation rate depends primarily upon the money supply growth rate. 
C) rate of growth of the money supply, while the inflation rate depends primarily upon the market power of unions. 
D) existence of efficiency wages, while the inflation rate depends primarily upon the extent to which firms are competitive. 
A) market power of unions, while the inflation rate depends primarily upon government spending. 
B) minimum wage, while the inflation rate depends primarily upon the money supply growth rate. 
C) rate of growth of the money supply, while the inflation rate depends primarily upon the market power of unions. 
D) existence of efficiency wages, while the inflation rate depends primarily upon the extent to which firms are competitive.

Question 18

Samuelson and Solow argued that when unemployment is high, there is

Accepted Answer

A) upward pressures on wages and prices. 
B) upward pressures on wages and downward pressures on prices. 
C) upward pressures on prices and downward pressures on wages. 
D) downward pressures on wages and prices. 
A) upward pressures on wages and prices. 
B) upward pressures on wages and downward pressures on prices. 
C) upward pressures on prices and downward pressures on wages. 
D) downward pressures on wages and prices.

Question 19

From 1993-2001 the U.S. economy experienced

Accepted Answer

A) relatively low inflation and unemployment rates. 
B) relatively high inflation and unemployment rates. 
C) relatively low inflation rates and relatively high unemployment rates. 
D) relatively high inflation rates and relatively low unemployment rates. 
A) relatively low inflation and unemployment rates. 
B) relatively high inflation and unemployment rates. 
C) relatively low inflation rates and relatively high unemployment rates. 
D) relatively high inflation rates and relatively low unemployment rates.

Question 20

During the financial crisis Congress and President Obama authorized tax cuts and increases in government spending. According to the Phillips curve, in the short run these policies should have

Accepted Answer

A) reduced inflation and unemployment. 
B) raised inflation and unemployment. 
C) reduced inflation and raised unemployment. 
D) raised inflation and reduced unemployment. 
A) reduced inflation and unemployment. 
B) raised inflation and unemployment. 
C) reduced inflation and raised unemployment. 
D) raised inflation and reduced unemployment.

In the early 1970s, the short-run Phillips curve shifted

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

An adverse supply shock causes output to

The Economy in 2008 In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy. -Refer to the Economy in 2008. The effects of increased prices of world commodities is shown by shifting

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

In the long run, a decrease in the money supply growth rate

From 2008-2009 the Federal Reserve created a very large increase in the money supply. According to the short-run Phillips curve this policy should have

The monetary-policy framework called inflation targeting is used explicitly by

Country A's long-run Phillips curve is farther to the right than country B's. Country A and country B are identical in all other ways. In particular, they have the same money supply growth rates. In the long run as compared to country B country A will have

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain.

The misery index is supposed to measure the

Friedman argued that the Fed could use monetary policy to peg

One determinant of the long-run average unemployment rate is the

Samuelson and Solow argued that when unemployment is high, there is

From 1993-2001 the U.S. economy experienced

During the financial crisis Congress and President Obama authorized tax cuts and increases in government spending. According to the Phillips curve, in the short run these policies should have

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

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

In the early 1970s, the short-run Phillips curve shifted

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

The short-run Phillips curve indicates that expansionary monetary policy will temporarily raise the unemployment rate above its natural rate.

An adverse supply shock causes output to

The Economy in 2008 In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy. -Refer to the Economy in 2008. The effects of increased prices of world commodities is shown by shifting

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

In the long run, a decrease in the money supply growth rate

From 2008-2009 the Federal Reserve created a very large increase in the money supply. According to the short-run Phillips curve this policy should have

The monetary-policy framework called inflation targeting is used explicitly by

Country A's long-run Phillips curve is farther to the right than country B's. Country A and country B are identical in all other ways. In particular, they have the same money supply growth rates. In the long run as compared to country B country A will have

Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain.

The misery index is supposed to measure the

Friedman argued that the Fed could use monetary policy to peg

One determinant of the long-run average unemployment rate is the

Samuelson and Solow argued that when unemployment is high, there is

From 1993-2001 the U.S. economy experienced

During the financial crisis Congress and President Obama authorized tax cuts and increases in government spending. According to the Phillips curve, in the short run these policies should have

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

Filters