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

If a central bank attempts to lower the inflation rate but the public doesn't believe the inflation rate will fall as far as the central bank says, then in the short run unemployment

An increase in expected inflation shifts

A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.

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

A.W. Phillips's discovery of a particular relationship between unemployment and inflation for the United Kingdom

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

Which of the following shifts the long-run Phillips curve left?

Monetary Policy in Flosserland In Flosserland, the Department of Finance is responsible for monetary policy. Flosserland has had an inflation rate of 25% for many years. -Refer to Monetary Policy in Mokania. The Bank of Mokania publicizes that it intends to reduce the inflation rate to 5%. If it actually reduces inflation to 3% and people were expecting inflation to fall only to 8%, then

Figure 35-7 Use the two graphs in the diagram to answer the following questions. -Refer to Figure 35-7. Starting from C and 3, in the short run an unexpected increase in money supply growth moves the economy to

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

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

If because they expect the central bank to disinflate, people reduce their inflation expectations, then is the sacrifice ratio larger or smaller the otherwise? Defend your answer by referring to the Phillips curve.

The short-run Phillips curve intersects the long-run Phillips curve where

The natural rate of unemployment

According to the Phillips curve diagram, if a central bank disinflates what ultimately happens to the unemployment rate?

There is an adverse supply shock. In response the Federal Reserve pursues an expansionary monetary policy. Taking into account both the shock and the Federal Reserve's policy, which of the following are we sure of?

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

A favorable supply shock will cause inflation to

If the central bank raises the rate at which it increases the money supply, then in the short run unemployment is

The monetary-policy framework called inflation targeting is used explicitly by