Exam 22: The Short Run Trade Off Between Inflation and Unemployment: Shifts in the Phillips Curve the Role of Expectations

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7.The economy would move from C to B

Prime Minister Emma Bigshot urges passage of a bill to reduce unemployment benefits from very generous levels in her country.She also urges her country's central bank to raise the rate at which the money supply is increasing.In the long run which,if either,of these policies will reduce the unemployment rate?

Friedman and Phelps argued that

The long-run Phillips curve would shift to the left if

Consider two countries: Eastland and Westland.Eastland's long-run Phillips curve sits further to the right than does Westland's long-run Phillips curve.Eastland and Westland are identical in all other ways.In particular,they have the same money supply growth rates.In the long run,compared to Westland,which of the following will we observe in Eastland?

An increase in expected inflation shifts the

The analysis of Friedman and Phelps can be summarized in the following equation where a is a positive number:

Suppose the Federal Reserve pursues contractionary monetary policy.In the long run

Country A has a higher money supply growth rate and a long-run Phillips curve that is farther to the left than country B's.In the long run as compared to country B,country A will have

If the long-run Phillips curve shifts to the left,then for any given rate of money growth and inflation the economy has

The position of the long-run Phillips curve depends on

If people anticipate higher inflation,but inflation remains the same then

Any policy change that reduced the natural rate of unemployment

The economy is in long-run equilibrium when Senator Soldout argues that the Fed should do more to fight unemployment.He argues that if the Fed increased the money supply faster,more workers would find jobs.The Senator's argument

If the government reduced the minimum wage and pursued contractionary monetary policy,then in the long run

Moving from the late 1960s to 1970-1973,

To say that the natural rate of unemployment changes over time is to say that

Figure 35-5 -Refer to figure 35-5.In this order,which curve is a long-run Phillips curve and which is a short-run Phillips curve?

If the natural rate of unemployment falls,

In the early 1970s,the short-run Phillips curve shifted