Exam 17: The Short-Run Tradeoff Between Inflation and Unemployment

Milton Friedman argued that the Fed's control over the money supply could be used to peg

The analysis of Friedman and Phelps argues that an expected change in inflation has no impact on the unemployment rate.

In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?

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

In 1980, the combination of inflation and unemployment the U.S. was experiencing

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. In the short-run the housing and financial crises

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

If policymakers decrease aggregate demand, then in the long run

Disinflation is a

How are the effects of a favorable supply shock shown in the Phillips curve diagram? If the Fed wants to return unemployment to its natural rate after the shock, what should it do?

Suppose a central bank announced that it was going to make a serious effort to fight inflation. A few years later the inflation rate is lower, but there had been a serious recession. We could conclude with certainty that

A decrease in government expenditures serves as an example of an adverse supply shock.

A central bank pledges to reduce the inflation rate from 20% to 5%. People reduce their inflation expectations to 10%, but the central bank only reduces inflation to 15%. What happens to the unemployment rate?

Which of the following is an example of an adverse supply shock?

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. In the short run the increased prices of world commodities

Soon after he became the chairman of the Federal Reserve System in 1979, Paul Volcker embarked on a course

In the long run, if there is an increase in the money supply growth rate, which of the following curves shifts right?

Which of the following would tend to shorten recessions associated with anti-inflation policies by central banks?

In most of the 1970s, the Fed's policy created expectations of high inflation.

Suppose the price level is 110.00 at the end of 2020, 121.00 at the end of 2021, and 128.26 at the end of 2022. Can we accurately describe the period 2021-2022 as a period of disinflation?