Question 1

Other things the same, an increase in aggregate demand reduces unemployment and raises inflation in the short run.

Accepted Answer

A) True 
 B)False

Question 2

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 3

The short-run Phillips curve shows the combinations of

Accepted Answer

A)  unemployment and inflation that arise in the short run as aggregate demand shifts the economy along the short-run aggregate supply curve. 
B)  unemployment and inflation that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve. 
C)  real GDP and the price level that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve. 
D)  None of the above is correct. 
A)  unemployment and inflation that arise in the short run as aggregate demand shifts the economy along the short-run aggregate supply curve. 
B)  unemployment and inflation that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve. 
C)  real GDP and the price level that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve. 
D)  None of the above is correct.

Question 4

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

Accepted Answer

A)  higher unemployment and lower output. 
B)  higher unemployment and higher output. 
C)  lower unemployment and lower output. 
D)  lower unemployment and higher output. 
A)  higher unemployment and lower output. 
B)  higher unemployment and higher output. 
C)  lower unemployment and lower output. 
D)  lower unemployment and higher output.

Question 5

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

Accepted Answer

A)  is completely correct. 
B)  is completely wrong. 
C)  is true for the short run but not the long run. 
D)  is true for the long run but not the short run. 
A)  is completely correct. 
B)  is completely wrong. 
C)  is true for the short run but not the long run. 
D)  is true for the long run but not the short run.

Question 6

Which of the following is downward-sloping?

Accepted Answer

A)  both the long-run Phillips curve and the long-run aggregate-supply curve 
B)  neither the long-run Phillips curve nor the long-run aggregate-supply curve 
C)  the long-run Phillips curve, but not the long-run aggregate-supply curve 
D)  the short-run Phillips curve, but not the long-run aggregate-supply curve 
A)  both the long-run Phillips curve and the long-run aggregate-supply curve 
B)  neither the long-run Phillips curve nor the long-run aggregate-supply curve 
C)  the long-run Phillips curve, but not the long-run aggregate-supply curve 
D)  the short-run Phillips curve, but not the long-run aggregate-supply curve

Question 7

As the aggregate demand curve shifts leftward along a given aggregate supply curve,

Accepted Answer

A)  unemployment and inflation are higher. 
B)  unemployment and inflation are lower. 
C)  unemployment is higher and inflation is lower. 
D)  unemployment is lower and inflation is higher. 
A)  unemployment and inflation are higher. 
B)  unemployment and inflation are lower. 
C)  unemployment is higher and inflation is lower. 
D)  unemployment is lower and inflation is higher.

Question 8

Figure 17-3. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the left-hand diagram, Y represents output and on the right-hand diagram, U represents the unemployment rate.
    
-Refer to Figure 17-3. Assume the figure charts possible outcomes for the year 2018. In 2018, the economy is at point B on the left-hand graph, which corresponds to point B on the right-hand graph. Also, point A on the left-hand graph corresponds to A on the right-hand graph. The price level in the year 2018 is

Accepted Answer

A)  155.56. 
B)  159.00. 
C)  163.50. 
D)  170.04. 
A)  155.56. 
B)  159.00. 
C)  163.50. 
D)  170.04.

Question 9

Samuelson and Solow believed that the Phillips curve offered policymakers a menu of possible economic outcomes.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

Accepted Answer

A)  moving to the left along the short-run Phillips curve. 
B)  moving to the right along the short-run Phillips curve. 
C)  shifting the short-run Phillips curve to the right. 
D)  shifting the short-run Phillips curve to the left. 
A)  moving to the left along the short-run Phillips curve. 
B)  moving to the right along the short-run Phillips curve. 
C)  shifting the short-run Phillips curve to the right. 
D)  shifting the short-run Phillips curve to the left.

Question 11

If policymakers increase aggregate demand, then in the short run the price level

Accepted Answer

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

Question 12

Disinflation is like

Accepted Answer

A)  slowing a car down, whereas deflation is like putting the car into reverse gear. 
B)  maintaining a car's speed, whereas deflation is like slowing the car down. 
C)  putting a car into reverse gear, whereas deflation is like slowing the car down. 
D)  maintaining a car's speed, whereas deflation is like putting the car into reverse gear. 
A)  slowing a car down, whereas deflation is like putting the car into reverse gear. 
B)  maintaining a car's speed, whereas deflation is like slowing the car down. 
C)  putting a car into reverse gear, whereas deflation is like slowing the car down. 
D)  maintaining a car's speed, whereas deflation is like putting the car into reverse gear.

Question 13

If expected inflation increases, which of the following shifts right?

Accepted Answer

A)  both the short-run and the long-run Phillips curves 
B)  the short-run but not the long-run Phillips curve 
C)  the long-run but not the short-run Phillips curve 
D)  neither the long-run nor the short-run Phillips curve 
A)  both the short-run and the long-run Phillips curves 
B)  the short-run but not the long-run Phillips curve 
C)  the long-run but not the short-run Phillips curve 
D)  neither the long-run nor the short-run Phillips curve

Question 14

If people believe that the central bank is going to reduce inflation

Accepted Answer

A)  the short-run Phillips curve shifts right and the sacrifice ratio will rise. 
B)  the short-run Phillips curve shifts right and the sacrifice ratio will fall. 
C)  the short-run Phillips curve shifts left and the sacrifice ratio will rise. 
D)  the short-run Phillips curve shifts left and the sacrifice ratio will fall. 
A)  the short-run Phillips curve shifts right and the sacrifice ratio will rise. 
B)  the short-run Phillips curve shifts right and the sacrifice ratio will fall. 
C)  the short-run Phillips curve shifts left and the sacrifice ratio will rise. 
D)  the short-run Phillips curve shifts left and the sacrifice ratio will fall.

Question 15

If the minimum wage increased, then at any given rate of inflation

Accepted Answer

A)  both output and employment would be higher. 
B)  neither output nor employment would be higher. 
C)  output would be higher and unemployment would be lower. 
D)  output would be lower and unemployment would be higher. 
A)  both output and employment would be higher. 
B)  neither output nor employment would be higher. 
C)  output would be higher and unemployment would be lower. 
D)  output would be lower and unemployment would be higher.

Question 16

According to the Phillips curve, unemployment and inflation are negatively related in

Accepted Answer

A)  the short run and in the long run. 
B)  the short run, but not in the long run. 
C)  the long run, but not in the short run. 
D)  neither the long run nor the short run. 
A)  the short run and in the long run. 
B)  the short run, but not in the long run. 
C)  the long run, but not in the short run. 
D)  neither the long run nor the short run.

Question 17

Which of the following would cause the price level to fall and output to rise in the short run?

Accepted Answer

A)  an increase in the money supply 
B)  a decrease in the money supply 
C)  an adverse supply shock 
D)  a favorable supply shock 
A)  an increase in the money supply 
B)  a decrease in the money supply 
C)  an adverse supply shock 
D)  a favorable supply shock

Question 18

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  inflation will be lower. 
B)  unemployment will be higher. 
C)  real GDP will be lower. 
D)  All of the above are correct. 
A)  inflation will be lower. 
B)  unemployment will be higher. 
C)  real GDP will be lower. 
D)  All of the above are correct.

Question 20

An adverse supply shock shifts the short-run Phillips curve to the

Accepted Answer

A)  right. This means the unemployment rate is higher at each inflation rate. 
B)  right. This means the unemployment rate is lower at each inflation rate. 
C)  left. This means the unemployment rate is higher at each inflation rate. 
D)  left. This means the unemployment rate is lower at each inflation rate. 
A)  right. This means the unemployment rate is higher at each inflation rate. 
B)  right. This means the unemployment rate is lower at each inflation rate. 
C)  left. This means the unemployment rate is higher at each inflation rate. 
D)  left. This means the unemployment rate is lower at each inflation rate.

Other things the same, an increase in aggregate demand reduces unemployment and raises inflation in the short run.

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

The short-run Phillips curve shows the combinations of

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

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

Which of the following is downward-sloping?

As the aggregate demand curve shifts leftward along a given aggregate supply curve,

Samuelson and Solow believed that the Phillips curve offered policymakers a menu of possible economic outcomes.

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

If policymakers increase aggregate demand, then in the short run the price level

Disinflation is like

If expected inflation increases, which of the following shifts right?

If people believe that the central bank is going to reduce inflation

If the minimum wage increased, then at any given rate of inflation

According to the Phillips curve, unemployment and inflation are negatively related in

Which of the following would cause the price level to fall and output to rise in the short run?

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

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

An adverse supply shock shifts the short-run Phillips curve to the

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

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

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

Other things the same, an increase in aggregate demand reduces unemployment and raises inflation in the short run.

A rightward shift of the short-run aggregate-supply curve results in a more favorable trade-off between inflation and unemployment.

The short-run Phillips curve shows the combinations of

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

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

Which of the following is downward-sloping?

As the aggregate demand curve shifts leftward along a given aggregate supply curve,

Samuelson and Solow believed that the Phillips curve offered policymakers a menu of possible economic outcomes.

Suppose that the central bank unexpectedly increases the growth rate of the money supply. In the short run the effects of this are shown by

If policymakers increase aggregate demand, then in the short run the price level

Disinflation is like

If expected inflation increases, which of the following shifts right?

If people believe that the central bank is going to reduce inflation

If the minimum wage increased, then at any given rate of inflation

According to the Phillips curve, unemployment and inflation are negatively related in

Which of the following would cause the price level to fall and output to rise in the short run?

An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.

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

An adverse supply shock shifts the short-run Phillips curve to the

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

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

Filters