Question 1

What does the position of the long-run Phillips curve depend on?

Accepted Answer

A)  the natural rate of unemployment 
B)  the actual rate of unemployment 
C)  the actual inflation rate 
D)  the expected inflation rate 
A)  the natural rate of unemployment 
B)  the actual rate of unemployment 
C)  the actual inflation rate 
D)  the expected inflation rate

Question 2

Proponents of rational expectations argue that failing to account for people's revised expectations led to estimates of the sacrifice ratio that were too high.

Accepted Answer

A) True 
 B)False

Question 3

Some economists argue that simply and suddenly reducing money supply growth is a costly way to reduce inflation and that it may not work.For example,if a government cuts money growth but makes no real reform,people expect that the government will soon start printing more money again to pay for its expenditures,and the promise to fight inflation will not be credible.Explain the importance of an inflation-reduction policy that is announced ahead of time and is credible.

Accepted Answer

In a country where expected inflation ha

Question 4

Figure 16-1  
-Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,an increase in taxes moves the economy to where?

Accepted Answer

A)  b and 2 
B)  d and 3 
C)  e and 2 
D)  b and 3 
A)  b and 2 
B)  d and 3 
C)  e and 2 
D)  b and 3

Question 5

Are the effects of an increase in aggregate demand in the AD-AS model consistent with the Phillips curve? Explain.

Accepted Answer

Consider what happens when the aggregate

Question 6

If inflation expectations rise,how do the short-run Phillips curve and unemployment change?

Accepted Answer

A)  The short-run Phillips curve shifts right,so that at any inflation rate unemployment is higher. 
B)  The short-run Phillips curve shifts left,so that at any inflation rate unemployment is higher. 
C)  The short-run Phillips curve shifts right,so that at any inflation rate unemployment is lower. 
D)  The short-run Phillips curve shifts left,so that at any inflation rate unemployment is lower. 
A)  The short-run Phillips curve shifts right,so that at any inflation rate unemployment is higher. 
B)  The short-run Phillips curve shifts left,so that at any inflation rate unemployment is higher. 
C)  The short-run Phillips curve shifts right,so that at any inflation rate unemployment is lower. 
D)  The short-run Phillips curve shifts left,so that at any inflation rate unemployment is lower.

Question 7

Who is a leading economist in the theory of rational expectations?

Accepted Answer

A)  Adam Smith 
B)  Richard Lipsey 
C)  William Phillips 
D)  Thomas Sargent 
A)  Adam Smith 
B)  Richard Lipsey 
C)  William Phillips 
D)  Thomas Sargent

Question 8

Figure 16-4  
-Refer to the Figure 16-4.What is the natural rate of unemployment?

Accepted Answer

A)  0 percent 
B)  2 percent 
C)  5 percent 
D)  8 percent 
A)  0 percent 
B)  2 percent 
C)  5 percent 
D)  8 percent

Question 9

In recent years,inflation expectations have fallen.How did this shift the short-run Phillips curve,and what are the implications for unemployment?

Accepted Answer

A)  This shifted the short-run Phillips curve left,meaning that at any given inflation rate,unemployment will be lower in the short run than before. 
B)  This shifted the short-run Phillips curve right,meaning that at any given inflation rate,unemployment will be lower in the short run than before. 
C)  This shifted the short-run Phillips curve right,meaning that at any given inflation rate,unemployment will be higher in the short run than before. 
D)  This shifted the short-run Phillips curve left,meaning that at any given inflation rate.unemployment will be higher in the short run than before. 
A)  This shifted the short-run Phillips curve left,meaning that at any given inflation rate,unemployment will be lower in the short run than before. 
B)  This shifted the short-run Phillips curve right,meaning that at any given inflation rate,unemployment will be lower in the short run than before. 
C)  This shifted the short-run Phillips curve right,meaning that at any given inflation rate,unemployment will be higher in the short run than before. 
D)  This shifted the short-run Phillips curve left,meaning that at any given inflation rate.unemployment will be higher in the short run than before.

Question 10

What happened to expected inflation in Canada during the 1970s?

Accepted Answer

A)  It increased substantially. 
B)  It increased slightly. 
C)  It decreased slightly. 
D)  It decreased substantially. 
A)  It increased substantially. 
B)  It increased slightly. 
C)  It decreased slightly. 
D)  It decreased substantially.

Question 11

Suppose the central bank wants to permanently reduce the inflation rate.What are the possible ways of doing so,and what are the consequences?

Accepted Answer

In the 1970s,Canadian authorities tried

Question 12

The vertical long-run Phillips curve is an exception to monetary neutrality implied by the classical dichotomy.

Accepted Answer

A) True 
 B)False

Question 13

Short-run outcomes in the economy can be expressed in terms of output and the price level,or in terms of unemployment and inflation.

Accepted Answer

A) True 
 B)False

Question 14

Figure 16-1  
-Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,where does an increase in government expenditures move the economy?

Accepted Answer

A)  b and 2 
B)  e and 3 
C)  d and 3 
D)  c and 2 
A)  b and 2 
B)  e and 3 
C)  d and 3 
D)  c and 2

Question 15

If policymakers expand aggregate demand,what happens to inflation and unemployment?

Accepted Answer

A)  Inflation falls but unemployment rises. 
B)  Inflation and unemployment fall. 
C)  Inflation and unemployment rise. 
D)  Inflation rises but unemployment falls. 
A)  Inflation falls but unemployment rises. 
B)  Inflation and unemployment fall. 
C)  Inflation and unemployment rise. 
D)  Inflation rises but unemployment falls.

Question 16

Figure 16-1  
-Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,where does a decrease in the money supply growth rate move the economy?

Accepted Answer

A)  e and 1 
B)  d and 2 
C)  d and 3 
D)  a and 3 
A)  e and 1 
B)  d and 2 
C)  d and 3 
D)  a and 3

Question 17

According to Samuelson and Solow,when aggregate demand is low,how are unemployment,wages,and prices affected?

Accepted Answer

A)  Unemployment is high,so there is upward pressure on wages and prices. 
B)  Unemployment is high,so there is downward pressure on wages and prices. 
C)  Unemployment is low,so there is upward pressure on wages and prices. 
D)  Unemployment is low,so there is downward pressure on wages and prices. 
A)  Unemployment is high,so there is upward pressure on wages and prices. 
B)  Unemployment is high,so there is downward pressure on wages and prices. 
C)  Unemployment is low,so there is upward pressure on wages and prices. 
D)  Unemployment is low,so there is downward pressure on wages and prices.

Question 18

Which of the following data supported A.W.Phillips' findings?

Accepted Answer

A)  data from 1861-1957 for the United Kingdom 
B)  data from 1861-1957 for the United States 
C)  data mostly from the post-World War II period in the United Kingdom 
D)  data mostly from the post-World War II period in the United States 
A)  data from 1861-1957 for the United Kingdom 
B)  data from 1861-1957 for the United States 
C)  data mostly from the post-World War II period in the United Kingdom 
D)  data mostly from the post-World War II period in the United States

Question 19

How does a decrease in the expected rate of inflation shift the Phillips curves?

Accepted Answer

A)  It shifts both the short-run and long-run Phillips curves to the right. 
B)  It shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C)  It shifts only the short-run Phillips curve to the right. 
D)  It shifts only the short-run Phillips curve to the left. 
A)  It shifts both the short-run and long-run Phillips curves to the right. 
B)  It shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C)  It shifts only the short-run Phillips curve to the right. 
D)  It shifts only the short-run Phillips curve to the left.

Question 20

Suppose that reducing inflation 3 percentage points would cost a country 15 percent of annual output.What is this country's sacrifice ratio?

Accepted Answer

A)  3 
B)  5 
C)  8 
D)  12 
A)  3 
B)  5 
C)  8 
D)  12

What does the position of the long-run Phillips curve depend on?

Proponents of rational expectations argue that failing to account for people's revised expectations led to estimates of the sacrifice ratio that were too high.

Figure 16-1 -Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,an increase in taxes moves the economy to where?

Are the effects of an increase in aggregate demand in the AD-AS model consistent with the Phillips curve? Explain.

If inflation expectations rise,how do the short-run Phillips curve and unemployment change?

Who is a leading economist in the theory of rational expectations?

Figure 16-4 -Refer to the Figure 16-4.What is the natural rate of unemployment?

In recent years,inflation expectations have fallen.How did this shift the short-run Phillips curve,and what are the implications for unemployment?

What happened to expected inflation in Canada during the 1970s?

Suppose the central bank wants to permanently reduce the inflation rate.What are the possible ways of doing so,and what are the consequences?

The vertical long-run Phillips curve is an exception to monetary neutrality implied by the classical dichotomy.

Short-run outcomes in the economy can be expressed in terms of output and the price level,or in terms of unemployment and inflation.

Figure 16-1 -Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,where does an increase in government expenditures move the economy?

If policymakers expand aggregate demand,what happens to inflation and unemployment?

Figure 16-1 -Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,where does a decrease in the money supply growth rate move the economy?

According to Samuelson and Solow,when aggregate demand is low,how are unemployment,wages,and prices affected?

Which of the following data supported A.W.Phillips' findings?

How does a decrease in the expected rate of inflation shift the Phillips curves?

Suppose that reducing inflation 3 percentage points would cost a country 15 percent of annual output.What is this country's sacrifice ratio?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Five Debates Over Macroeconomic Policy

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Exam 16: The Short-Run Tradeoff Between Inflation and Unemployment

What does the position of the long-run Phillips curve depend on?

Proponents of rational expectations argue that failing to account for people's revised expectations led to estimates of the sacrifice ratio that were too high.

Figure 16-1 -Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,an increase in taxes moves the economy to where?

Are the effects of an increase in aggregate demand in the AD-AS model consistent with the Phillips curve? Explain.

If inflation expectations rise,how do the short-run Phillips curve and unemployment change?

Who is a leading economist in the theory of rational expectations?

Figure 16-4 -Refer to the Figure 16-4.What is the natural rate of unemployment?

In recent years,inflation expectations have fallen.How did this shift the short-run Phillips curve,and what are the implications for unemployment?

What happened to expected inflation in Canada during the 1970s?

Suppose the central bank wants to permanently reduce the inflation rate.What are the possible ways of doing so,and what are the consequences?

The vertical long-run Phillips curve is an exception to monetary neutrality implied by the classical dichotomy.

Short-run outcomes in the economy can be expressed in terms of output and the price level,or in terms of unemployment and inflation.

Figure 16-1 -Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,where does an increase in government expenditures move the economy?

If policymakers expand aggregate demand,what happens to inflation and unemployment?

Figure 16-1 -Refer to the Figure 16-1.If the economy starts at c and 1,then in the short run,where does a decrease in the money supply growth rate move the economy?

According to Samuelson and Solow,when aggregate demand is low,how are unemployment,wages,and prices affected?

Which of the following data supported A.W.Phillips' findings?

How does a decrease in the expected rate of inflation shift the Phillips curves?

Suppose that reducing inflation 3 percentage points would cost a country 15 percent of annual output.What is this country's sacrifice ratio?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Five Debates Over Macroeconomic Policy

Filters