Exam 27: Issues in Macroeconomic Theory and Policy

According to the Phillips curve analysis,if policy makers reduce aggregate demand growth,they can lower inflation,but only at the cost of a:

If employees and employers always accurately forecast inflation,what is the shape of the Phillips curve?

Which of the following statements was probably made by an adherent of rational expectations?

Which of the following would shift the short-run Phillips curve to the left?

If an increase in the growth rate of AD leads to an increase in real GDP in the short run:

The natural rate hypothesis suggests that improvements in technology that occur normally during the course of time will lead the economy to the natural rate of unemployment.

If inflation rises or falls faster than people forecast in the short run but not in the long run,what are the shapes of the Phillips curves?

A.H.Phillips developed the Phillips curve concept by looking at the relationship between:

If a fixed money growth rate is followed and the growth rate of the natural level of real GDP is 4 percent per year,the average rate of inflation is:

If expectations are rational,can monetary and fiscal policy makers accurately control the effects their policies have on unemployment?

Why is indexing not commonly adopted in spite of the fact that it eliminates most of the wealth transfers associated with unexpected inflation?

The short-run Phillips curve is downward sloping but the long-run is a vertical line.

Throughout history many governments have financed government operations with the printing press,and paying government bills by increasing the money supply.The United States followed this path during the Civil War,approximately doubling the U.S.money supply between 1860 and 1865 using paper fiat money called Greenbacks.What do you think this rapid increase in the money supply did to inflation and inflationary expectations? Suppose the economy was in long-run equilibrium by the end of the war and the government began to remove Greenbacks and reduce the money supply.Use your understanding of the Phillips curve relationship to explain the effect on the economy.

If people have adaptive expectations,the Phillips curve model implies that whenever the actual rate of inflation is higher than the expected rate of inflation:

Which of the following believe that discretionary monetary policy and discretionary fiscal policy are effective countercyclical policy actions?

Lower than expected inflation rate:

Rational expectation theory implies that accurately anticipated change in aggregate demand:

The novelty of Phillips' article was his finding of a ____ correlation between ____ and ____.

Critics of rational expectation theory believe:

For the short-run Phillips curve to remain relatively stable,then changes in real GDP must occur primarily as a result of shifts in: