Exam 27: Issues in Macroeconomic Theory and Policy

If the economy is experiencing lower levels of unemployment,the short-run Phillips curve suggests that ____ additional employment can be purchased at ____ rates of inflation.

At lower rates of inflation and higher rates of unemployment,the slope of the Phillips curve is

Critics of inflation targeting will argue that central banks need flexibility.

According to economist Milton Friedman,

According to the Taylor rule,the Fed should:

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

At one time,policy makers interpreted the Phillips curve as offering a menu of inflation-unemployment choices.Today,the curve is no longer viewed this way.Why has the interpretation changed?

Which of the following is true?

At low rates of unemployment the Phillips curve becomes:

Proponents of the monetary rule believe that a constant growth rate in the money supply will lead to less uncertainty and greater credibility.

According to the Taylor rule,the Fed should:

Many economists think that,in the long run,the economy generally tends to move toward:

A conclusion of the theory of rational expectations is that,in the short run,the impact of discretionary fiscal policies designed to shift the AD curve will:

According to the natural rate hypothesis:

When expectations of inflation are revised downward,the short-run Phillips curve:

If the public has correct rational expectations and the Fed reduces both reserve requirements and the discount rate,it would be expected to result in:

If the inflation rate is decreasing while unemployment is increasing:

If the level of unemployment is above the natural rate of unemployment,it would be expected that:

When the economy is already operating at nearly full capacity,further fiscal or monetary stimulus will likely:

When expansionary policy is unanticipated,it leads to a short-run expansion in output and employment.