Question 1

Which of the following is vertical?

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 long-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 long-run Phillips curve, but not the long-run aggregate supply curve. A

Question 2

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

Accepted Answer

A)  both inflation and the unemployment rate are higher than they were prior to the change in policy. 
B)  inflation is higher and the unemployment rate is the same as it was prior to the change in policy. 
C)  inflation is lower and the unemployment rate is lower than it was prior to the change in policy. 
D)  inflation is lower and unemployment is the same as it was prior to the change in policy. 
A)  both inflation and the unemployment rate are higher than they were prior to the change in policy. 
B)  inflation is higher and the unemployment rate is the same as it was prior to the change in policy. 
C)  inflation is lower and the unemployment rate is lower than it was prior to the change in policy. 
D)  inflation is lower and unemployment is the same as it was prior to the change in policy. D

Question 3

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

Accepted Answer

No. Since the price level is falling over the period, it is accurate to characterize the period as one of deflation, rather than disinflation.

Question 4

Figure 35-1. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD curves. On the right-hand diagram, U represents the unemployment rate.
    
-Refer to Figure 35-1. Assuming the price level in the previous year was 100, point G on the right-hand graph corresponds to

Accepted Answer

A)  point A on the left-hand graph. 
B)  point B on the left-hand graph. 
C)  point C on the left-hand graph. 
D)  point D on the left-hand graph. 
A)  point A on the left-hand graph. 
B)  point B on the left-hand graph. 
C)  point C on the left-hand graph. 
D)  point D on the left-hand graph.

Question 5

By raising aggregate demand more than anticipated, policymakers

Accepted Answer

A)  reduce unemployment for awhile. 
B)  raise unemployment for awhile. 
C)  reduce unemployment permanently. 
D)  None of the above is correct. 
A)  reduce unemployment for awhile. 
B)  raise unemployment for awhile. 
C)  reduce unemployment permanently. 
D)  None of the above is correct.

Question 6

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

Accepted Answer

A)  a Phillips contraction. 
B)  an inflationary spiral. 
C)  a demand shock. 
D)  a supply shock. 
A)  a Phillips contraction. 
B)  an inflationary spiral. 
C)  a demand shock. 
D)  a supply shock.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

If people correctly anticipate that inflation will fall by 1%, then

Accepted Answer

A)  the short-run Phillips curve shifts right and unemployment is unchanged. 
B)  the short-run Phillips curve shifts right and unemployment rises. 
C)  the short-run Phillips curve shifts left and unemployment is unchanged. 
D)  the short-run Phillips curve would shift left and unemployment falls. 
A)  the short-run Phillips curve shifts right and unemployment is unchanged. 
B)  the short-run Phillips curve shifts right and unemployment rises. 
C)  the short-run Phillips curve shifts left and unemployment is unchanged. 
D)  the short-run Phillips curve would shift left and unemployment falls.

Question 9

Typical estimates of the sacrifice ratio suggest that about 10 percent of annual output has to be given up in order to reduce the inflation rate from

Accepted Answer

A)  8 percent to 4 percent. 
B)  8 percent to 5 percent. 
C)  7 percent to 5 percent. 
D)  7 percent to 6 percent. 
A)  8 percent to 4 percent. 
B)  8 percent to 5 percent. 
C)  7 percent to 5 percent. 
D)  7 percent to 6 percent.

Question 10

Figure 35-1. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD curves. On the right-hand diagram, U represents the unemployment rate.
    
-Refer to Figure 35-1. What is measured along the vertical axis of the right-hand graph?

Accepted Answer

A)  the interest rate 
B)  the inflation rate 
C)  the wage rate 
D)  the growth rate of the nominal money supply 
A)  the interest rate 
B)  the inflation rate 
C)  the wage rate 
D)  the growth rate of the nominal money supply

Question 11

Figure 35-3. 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 35-3. 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 12

Figure 35-2
Use the pair of diagrams below to answer the following questions.
    
-Refer to Figure 35-2. If the economy starts at C and 1, then in the short run, an increase in taxes moves the economy to

Accepted Answer

A)  B and 2. 
B)  D and 3. 
C)  E and 2. 
D)  None of the above is correct. 
A)  B and 2. 
B)  D and 3. 
C)  E and 2. 
D)  None of the above is correct.

Question 13

If the Federal Reserve increases the rate at which it increases the money supply, then unemployment is lower

Accepted Answer

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

Question 14

An adverse supply shock will cause output

Accepted Answer

A)  and prices to rise. 
B)  and prices to fall. 
C)  to rise and prices to fall. 
D)  to fall and prices to rise. 
A)  and prices to rise. 
B)  and prices to fall. 
C)  to rise and prices to fall. 
D)  to fall and prices to rise.

Question 15

By about 1973, U.S. policymakers had learned that

Accepted Answer

A)  Friedman and Phelps's analysis of inflation and unemployment had been correct. 
B)  the short-run Phillips curve shifts when expectations of inflation change. 
C)  there is no long-run trade-off between inflation and unemployment. 
D)  All of the above are correct. 
A)  Friedman and Phelps's analysis of inflation and unemployment had been correct. 
B)  the short-run Phillips curve shifts when expectations of inflation change. 
C)  there is no long-run trade-off between inflation and unemployment. 
D)  All of the above are correct.

Question 16

What is meant by the natural rate of unemployment?

Accepted Answer

It is the rate of un

Question 17

Which of the following would not be associated with a favorable supply shock?

Accepted Answer

A)  the short-run Phillips curve shifts left 
B)  unemployment falls 
C)  the price level rises 
D)  output rises. 
A)  the short-run Phillips curve shifts left 
B)  unemployment falls 
C)  the price level rises 
D)  output rises.

Question 18

Which of the following describes the Volcker disinflation most accurately?

Accepted Answer

A)  Almost all of the public believed that the Fed would keep money growth low, so unemployment rose less than it would have otherwise. 
B)  Almost all of the public believed that the Fed would keep money growth low, so unemployment rose more than it would have otherwise. 
C)  Much of the public did not believe that the Fed would keep money growth low, so unemployment rose less than it would have otherwise. 
D)  Much of the public did not believe that the Fed would keep money growth low, so unemployment rose more than it would have otherwise. 
A)  Almost all of the public believed that the Fed would keep money growth low, so unemployment rose less than it would have otherwise. 
B)  Almost all of the public believed that the Fed would keep money growth low, so unemployment rose more than it would have otherwise. 
C)  Much of the public did not believe that the Fed would keep money growth low, so unemployment rose less than it would have otherwise. 
D)  Much of the public did not believe that the Fed would keep money growth low, so unemployment rose more than it would have otherwise.

Question 19

How are the effects of the financial crisis shown using the Phillips curve diagram?

Accepted Answer

As a move down along

Question 20

The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy.
-Refer to The Economy in 2008. Given the effects of the financial and housing crisis on the price level and output and the effects of increased world commodity prices on the price level and output, the aggregate demand and aggregate supply model tells us that

Accepted Answer

A)  output rises and the price level falls. 
B)  output may rise, fall or stay the same and the price level rises. 
C)  output falls and the price level may rise, fall or stay the same. 
D)  None of the above is correct. 
A)  output rises and the price level falls. 
B)  output may rise, fall or stay the same and the price level rises. 
C)  output falls and the price level may rise, fall or stay the same. 
D)  None of the above is correct.

Which of the following is vertical?

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

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

By raising aggregate demand more than anticipated, policymakers

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

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

If people correctly anticipate that inflation will fall by 1%, then

Typical estimates of the sacrifice ratio suggest that about 10 percent of annual output has to be given up in order to reduce the inflation rate from

Figure 35-1. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD curves. On the right-hand diagram, U represents the unemployment rate. -Refer to Figure 35-1. What is measured along the vertical axis of the right-hand graph?

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2. If the economy starts at C and 1, then in the short run, an increase in taxes moves the economy to

If the Federal Reserve increases the rate at which it increases the money supply, then unemployment is lower

An adverse supply shock will cause output

By about 1973, U.S. policymakers had learned that

What is meant by the natural rate of unemployment?

Which of the following would not be associated with a favorable supply shock?

Which of the following describes the Volcker disinflation most accurately?

How are the effects of the financial crisis shown using the Phillips curve diagram?

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 and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Which of the following is vertical?

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

Suppose the price level is 115.00 at the end of 2020, 112.02 at the end of 2021, and 109.08 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?

By raising aggregate demand more than anticipated, policymakers

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

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

If people correctly anticipate that inflation will fall by 1%, then

Typical estimates of the sacrifice ratio suggest that about 10 percent of annual output has to be given up in order to reduce the inflation rate from

Figure 35-1. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD curves. On the right-hand diagram, U represents the unemployment rate. -Refer to Figure 35-1. What is measured along the vertical axis of the right-hand graph?

Figure 35-2 Use the pair of diagrams below to answer the following questions. -Refer to Figure 35-2. If the economy starts at C and 1, then in the short run, an increase in taxes moves the economy to

If the Federal Reserve increases the rate at which it increases the money supply, then unemployment is lower

An adverse supply shock will cause output

By about 1973, U.S. policymakers had learned that

What is meant by the natural rate of unemployment?

Which of the following would not be associated with a favorable supply shock?

Which of the following describes the Volcker disinflation most accurately?

How are the effects of the financial crisis shown using the Phillips curve diagram?

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 and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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