Exam 17: The Short-Run Trade-Off Between Inflation and Unemployment

France has a higher natural rate of unemployment than the United States. This suggests that

If inflation expectations rise, the short-run Phillips curve shifts

If a central bank decreases the money supply, then

Other things the same, a country that decides to reduce inflation will

An increase in inflation expectations shifts the short-run Phillips curve right and has no effect on the long-run Phillips curve.

In the long run a reduction in the money supply growth rate affects

In 1980, the U.S. misery index was

If efficiency wages became more common,

Assume the analysis of Friedman and Phelps is correct, so that the following equation is valid: Unemployment rate = Natural rate of unemployment - a $\times$ (A ctual inflation - x). In this equation,

Samuelson and Solow reasoned that when aggregate demand was high, unemployment was

Unexpectedly high inflation reduces unemployment in the short run, but as inflation expectations adjust the unemployment rate returns to its natural rate.

In the long run, if the Fed increases the rate at which it increases the money supply,

An event that directly affects firms' costs of production and thus the prices they charge is called

Samuelson and Solow argued that when unemployment is high, there is

On a given short-run Phillips curve which of the following is held constant?

A favorable supply shock causes output to

Some countries have inflation around or in excess of 8 percent. Suppose that the sacrifice ratio is 2.5. What is the cost of reducing inflation from 8 percent to 2 percent? In your answer, define the sacrifice ratio and explain how you found the cost of inflation reduction.

An adverse supply shock will cause output

If a government redesigned its unemployment insurance programs so that the unemployed had greater incentives to quickly find appropriate jobs, then which of the following curves would shift right?

Unemployment would decrease and prices increase if