Exam 23: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

To some economists, the "great moderation" means:

Suppose the inflation rate has risen 0.5 percent a year for the past three years.Using this experience an individual forecasts a 0.5 percent rise in the coming year's inflation rate.This is an example of:

Which of the following shifts the aggregate supply curve to the left?

The figure given below shows the Phillips curves of the U.S.economy during early 1960s to late 1970s. Figure 14.2 Refer to Figure 14.2.If the natural rate of unemployment is 5 percent, which of the following would cause a movement along Phillips curve III from point A to point B?

Which of the following would not be considered a real variable in determining a real business cycle?

Identify the correct statement.

Contrary to what believers in the Phillips curve would say, U.S.economic data from 1955 to 2000 show evidence of:

The shape of the long-run Phillips curve suggests that over a long time horizon there is a magnified tradeoff between the unemployment rate and inflation.

More stable macroeconomic policy does not contribute to less variability in real output.

Suppose that a labor union negotiates an increase in wages of 4 percent for the coming year because annual inflation for the past five years has been 4 percent.The expectations formed by the union are:

The long-run Phillips curve indicates that the consequences of trying to reduce unemployment below its natural rate would be:

Which of the following techniques adopted by the central banks around the world have helped them to achieve credibility?

Assume that an unemployed person expects inflation to be 4.5 percent.In reality, inflation turns out to be 2.9 percent.If wage expectations lag behind actual price changes:

The slope of the short-run Phillips curve is consistent with:

Consider an economy in equilibrium, and assume no change in aggregate demand.An earthquake that destroys many factories across the country would result in a(n):

During the 1970s, real shocks to the U.S.economy caused:

Assume that taxes are constant.If the government borrows $17 billion in new funds and has a budget deficit of $35 billion, then the central bank has to:

The Phillips curve based on the unemployment and inflation rates in the U.S.between 1961 and 1969 was:

What is the difference between the short-run Phillips curve and the long-run Phillips curve?

If nominal wages are contractually fixed and cannot change in the short run, then an unexpected decline in the inflation rate will reduce business revenues and lower the unemployment rate.