Exam 12: Unemployment and Inflation

Historically,Brazil has suffered higher and more variable rates of inflation than Venezuela.You would expect the short-run aggregate supply curve of Brazil to be ________ than that of Venezuela,and the Phillips curve of Brazil to be ________ than that of Venezuela.

The Phillips curve appeared to fit the data well for the United States in the

The argument that when policy changes,people's behavior changes so that historical relationships between macroeconomic variables will no longer hold is known as

The expectations-augmented Phillips curve is ? = ?e - 3(u - 0.05). (a)Graph the long-run Phillips curve and the short-run Phillips curve for an expected inflation rate of 0.03.If the Fed chooses to keep the actual inflation rate at 0.03,what will be the unemployment rate? Label the equilibrium point "A".What is the numerical value of the natural rate of unemployment? (b)An aggregate demand shock (resulting from increased exports of goods)raises the inflation rate to 0.06 (the natural rate of unemployment and the expected inflation rate are not affected).Show what happens on your graph.Label the equilibrium point "B".What is the numerical value of the unemployment rate? (c)In response to the aggregate demand shock,suppose the Fed allows the inflation rate of 0.06 to persist.Show what happens on your graph,labeling the equilibrium point "C".In the long run,what is the numerical value of the unemployment rate? (d)From the situation in part (c),suppose a supply shock (an oil price increase)raises the natural rate of unemployment by .01 from its original value.If the expected inflation rate does not change,show what happens in your graph,labeling the equilibrium point "D".

The amount of output lost when the inflation rate is reduced by one percentage point is called

One reason for the fall in the natural rate of unemployment since 1980 is

In the expectations-augmented Phillips curve,? = ?e - 3(u - ).If ? = 0.03 when ?e = 0.06 and u = 0.06,then =

Why did the government use expansionary monetary policies in the late 1970s,and what was the principal negative macroeconomic effect of these policies?

When actual inflation is less than expected inflation

Describe the principal costs of unemployment.Are there any benefits to unemployment?

In the expectations-augmented Phillips curve,? = ?e - 3(u - 0.05).When ? = 0.03 and ?e = 0.06,the unemployment rate is

Countries in which wages adjust rapidly to changes in the supply and demand for labor are likely to have ________ sacrifice ratio.

Countries in which wages adjust slowly to changes in the supply of and demand for labor are likely to have ________ sacrifice ratio.

When the economy goes into a recession,there's an increase in

Ball found that the disinflation of the early 1980s in the United States had a sacrifice ratio of about

If the expected inflation rate is unchanged,a fall in the natural rate of unemployment would

The negative relationship between unemployment and inflation is known as the

Shoe leather costs are

In the expectations-augmented Phillips curve,? = ?e - 3(u - 0.05).When ? = 0.06 and ?e = 0.03,the unemployment rate is

What are the pros and cons of using cold turkey disinflation compared to a policy of gradualism?