Question 1

Which of the following results in higher inflation and higher unemployment in the short run?

Accepted Answer

A)  a more expansionary monetary policy 
B)  a more contractionary monetary policy 
C)  a decrease in the minimum wage 
D)  an adverse supply shock such as an increase in the price of oil 
A)  a more expansionary monetary policy 
B)  a more contractionary monetary policy 
C)  a decrease in the minimum wage 
D)  an adverse supply shock such as an increase in the price of oil

Question 2

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. The effects of the housing and financial crises could be shown by shifting

Accepted Answer

A)  aggregate demand to the right. 
B)  aggregate demand to the left. 
C)  aggregate supply to the right. 
D)  aggregate supply to the left. 
A)  aggregate demand to the right. 
B)  aggregate demand to the left. 
C)  aggregate supply to the right. 
D)  aggregate supply to the left.

Question 3

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 effects of the housing and financial crises

Accepted Answer

A)  raise both inflation and the unemployment rate. 
B)  raise the inflation rate and reduce the unemployment rate. 
C)  reduce the inflation rate and raise the unemployment rate. 
D)  reduce both the inflation rate and the unemployment rate. 
A)  raise both inflation and the unemployment rate. 
B)  raise the inflation rate and reduce the unemployment rate. 
C)  reduce the inflation rate and raise the unemployment rate. 
D)  reduce both the inflation rate and the unemployment rate.

Question 4

If the central bank increases the money supply, then in the short run prices

Accepted Answer

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

Question 5

List one specific policy that would shift the long-run Phillips curve to the right.

Accepted Answer

More generous unempl

Question 6

In the long run,

Accepted Answer

A)  the natural rate of unemployment depends primarily on the level of aggregate demand. 
B)  inflation depends primarily upon the money supply growth rate. 
C)  there is a tradeoff between the inflation rate and the natural rate of unemployment. 
D)  All of the above are correct. 
A)  the natural rate of unemployment depends primarily on the level of aggregate demand. 
B)  inflation depends primarily upon the money supply growth rate. 
C)  there is a tradeoff between the inflation rate and the natural rate of unemployment. 
D)  All of the above are correct.

Question 7

Which of the following scenarios is consistent with typical estimates of the sacrifice ratio?

Accepted Answer

A)  Inflation is reduced from 4 percent to 1 percent, and annual output falls by 10 percent. 
B)  Inflation is reduced from 6 percent to 4 percent, and annual output falls by 10 percent. 
C)  Inflation is reduced from 8 percent to 5 percent, and annual output falls by 9 percent. 
D)  Inflation is reduced from 3 percent to 2 percent, and annual output falls by 3 percent. 
A)  Inflation is reduced from 4 percent to 1 percent, and annual output falls by 10 percent. 
B)  Inflation is reduced from 6 percent to 4 percent, and annual output falls by 10 percent. 
C)  Inflation is reduced from 8 percent to 5 percent, and annual output falls by 9 percent. 
D)  Inflation is reduced from 3 percent to 2 percent, and annual output falls by 3 percent.

Question 8

If there is a decline in business confidence and the Fed desires to return unemployment towards its natural rate, what should it do? If business confidence eventually returns to normal but the Fed does not reverse its policy, what eventually happens to the inflation rate?

Accepted Answer

Increase the money s

Question 9

If a central bank increases the money supply growth rate, then in the short run

Accepted Answer

A)  unemployment rises. In the long run the short-run Phillips curve shifts right. 
B)  unemployment rises. In the long run the short-run Phillips curve shifts left. 
C)  unemployment falls. In the long run the short-run Phillips curve shifts right. 
D)  unemployment falls. In the long run the short-run Phillips curve shifts left. 
A)  unemployment rises. In the long run the short-run Phillips curve shifts right. 
B)  unemployment rises. In the long run the short-run Phillips curve shifts left. 
C)  unemployment falls. In the long run the short-run Phillips curve shifts right. 
D)  unemployment falls. In the long run the short-run Phillips curve shifts left.

Question 10

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

Accepted Answer

A)  it seemed to work for wages but not for inflation. 
B)  monetary policy was ineffective in combating inflation. 
C)  the Phillips curve did not apply in the long run. 
D)  Phillips had made errors in collecting his data. 
A)  it seemed to work for wages but not for inflation. 
B)  monetary policy was ineffective in combating inflation. 
C)  the Phillips curve did not apply in the long run. 
D)  Phillips had made errors in collecting his data.

Question 11

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

Accepted Answer

A)  increases and unemployment increases. 
B)  increases and unemployment decreases. 
C)  decreases and unemployment increases. 
D)  decreases and unemployment decreases. 
A)  increases and unemployment increases. 
B)  increases and unemployment decreases. 
C)  decreases and unemployment increases. 
D)  decreases and unemployment decreases.

Question 12

A basis for the slope of the short-run Phillips curve is that when unemployment is high there are

Accepted Answer

A)  downward pressures on prices and wages. 
B)  downward pressures on prices and upward pressures on wages. 
C)  upward pressures on prices and downward pressures on wages. 
D)  upward pressures on prices and wages. 
A)  downward pressures on prices and wages. 
B)  downward pressures on prices and upward pressures on wages. 
C)  upward pressures on prices and downward pressures on wages. 
D)  upward pressures on prices and wages.

Question 13

Suppose the Fed decreased the growth rate of the money supply. Which of the following would be lower in the long run?

Accepted Answer

A)  both the natural rate of unemployment and the inflation rate 
B)  the natural rate of unemployment, but not the inflation rate 
C)  the inflation rate, but not the natural rate of unemployment 
D)  neither the natural unemployment rate nor the inflation rate 
A)  both the natural rate of unemployment and the inflation rate 
B)  the natural rate of unemployment, but not the inflation rate 
C)  the inflation rate, but not the natural rate of unemployment 
D)  neither the natural unemployment rate nor the inflation rate

Question 14

If the central bank increases the money supply, in the short run, the price level

Accepted Answer

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

Question 15

If consumption expenditures fall, then in the short run

Accepted Answer

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

Question 16

A favorable supply shock causes output to

Accepted Answer

A)  rise. To counter this a central bank would increase the money supply. 
B)  rise. To counter this a central bank would decrease the money supply. 
C)  fall. To counter this a central bank would increase the money supply. 
D)  fall. To counter this a central bank would decrease the money supply. 
A)  rise. To counter this a central bank would increase the money supply. 
B)  rise. To counter this a central bank would decrease the money supply. 
C)  fall. To counter this a central bank would increase the money supply. 
D)  fall. To counter this a central bank would decrease the money supply.

Question 17

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Accepted Answer

A) True 
 B)False

Question 18

Other things the same, in the long run a country that reduces the minimum wage from very high levels will have

Accepted Answer

A)  higher unemployment and lower inflation 
B)  lower unemployment and higher inflation 
C)  higher unemployment and the same level of inflation 
D)  lower unemployment and the same level of inflation 
A)  higher unemployment and lower inflation 
B)  lower unemployment and higher inflation 
C)  higher unemployment and the same level of inflation 
D)  lower unemployment and the same level of inflation

Question 19

Other things the same, if the central bank decreases the rate at which it increases the money supply, then in the long run

Accepted Answer

A)  the short-run Phillips curve shifts right. 
B)  the short-run Phillips curve shifts left. 
C)  the long-run Phillips curve shifts right. 
D)  the long-run Phillips curve shifts left. 
A)  the short-run Phillips curve shifts right. 
B)  the short-run Phillips curve shifts left. 
C)  the long-run Phillips curve shifts right. 
D)  the long-run Phillips curve shifts left.

Question 20

In the long run, a decrease in the money supply growth rate

Accepted Answer

A)  shifts both the long-run and the short-run Phillips curves right. 
B)  shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C)  shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D)  None of the above is correct. 
A)  shifts both the long-run and the short-run Phillips curves right. 
B)  shifts the long-run Phillips curve left and the short-run Phillips curve right. 
C)  shifts the long-run Phillips curve right and the short-run Phillips curve left. 
D)  None of the above is correct.

Which of the following results in higher inflation and higher unemployment in the short run?

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. The effects of the housing and financial crises could be shown by shifting

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 effects of the housing and financial crises

If the central bank increases the money supply, then in the short run prices

List one specific policy that would shift the long-run Phillips curve to the right.

In the long run,

Which of the following scenarios is consistent with typical estimates of the sacrifice ratio?

If there is a decline in business confidence and the Fed desires to return unemployment towards its natural rate, what should it do? If business confidence eventually returns to normal but the Fed does not reverse its policy, what eventually happens to the inflation rate?

If a central bank increases the money supply growth rate, then in the short run

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

A basis for the slope of the short-run Phillips curve is that when unemployment is high there are

Suppose the Fed decreased the growth rate of the money supply. Which of the following would be lower in the long run?

If the central bank increases the money supply, in the short run, the price level

If consumption expenditures fall, then in the short run

A favorable supply shock causes output to

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Other things the same, in the long run a country that reduces the minimum wage from very high levels will have

Other things the same, if the central bank decreases the rate at which it increases the money supply, then in the long run

In the long run, a decrease in the money supply growth rate

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 results in higher inflation and higher unemployment in the short run?

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. The effects of the housing and financial crises could be shown by shifting

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 effects of the housing and financial crises

If the central bank increases the money supply, then in the short run prices

List one specific policy that would shift the long-run Phillips curve to the right.

In the long run,

Which of the following scenarios is consistent with typical estimates of the sacrifice ratio?

If there is a decline in business confidence and the Fed desires to return unemployment towards its natural rate, what should it do? If business confidence eventually returns to normal but the Fed does not reverse its policy, what eventually happens to the inflation rate?

If a central bank increases the money supply growth rate, then in the short run

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

When aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation

A basis for the slope of the short-run Phillips curve is that when unemployment is high there are

Suppose the Fed decreased the growth rate of the money supply. Which of the following would be lower in the long run?

If the central bank increases the money supply, in the short run, the price level

If consumption expenditures fall, then in the short run

A favorable supply shock causes output to

An increase in the natural rate of unemployment shifts the long-run Phillips curve to the right.

Other things the same, in the long run a country that reduces the minimum wage from very high levels will have

Other things the same, if the central bank decreases the rate at which it increases the money supply, then in the long run

In the long run, a decrease in the money supply growth rate

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