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

If the central bank increases the money supply, then in the short run prices

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

Samuelson and Solow believed that the Phillips curve offered policymakers a menu of possible economic outcomes.

In the equation, Unemployment rate = Natural rate of unemployment - a * ctual inflation - Expected inflation), The variable a is a parameter that measures how much

The position of the long-run Phillips curve depends on

Just as the aggregate-demand curve slopes downward only in the short run, the trade-off between inflation and unemployment holds only in the long run.

The long-run Phillips curve is consistent with monetary neutrality implied by the classical dichotomy.

Figure 22-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 22-2. If the economy starts at C and 1, then in the short run, an increase in the money supply growth rate moves the economy to

In the long run, policy that changes aggregate demand changes

In 1979, Fed chair Paul Volcker decided to pursue a policy

Figure 22-5 Use the graph below to answer the following questions. -Refer to Figure 22-5. Curve 1 is the

The short-run Phillips curve is based on the classical dichotomy.

In the long run, an increase in the money supply growth rate

Other things the same, if the central bank decreases the rate at which it increases the money supply, then in the long run

A policy intended to reduce unemployment by taking advantage of a tradeoff between inflation and unemployment leads to

A favorable supply shock causes the price level to

Figure 22-5 Use the graph below to answer the following questions. -Refer to Figure 22-5. If the economy starts at C and the money supply growth rate increases, then in the short run the economy moves to

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 short run, an unexpected decrease in money supply growth moves the economy to

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Figure 22-4 -Refer to figure 22-4. In this order, which curve is a long-run Phillips curve and which is a short-run Phillips curve?