Question 1

A favorable supply shock will cause the price level

Accepted Answer

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

Question 2

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

Accepted Answer

A)  Inflation expectations rise which shifts the short-run Phillips curve to the right. 
B)  Inflation expectations rise which shifts the short-run Phillips curve to the left. 
C)  Inflation expectations fall which shifts the short-run Phillips curve to the right. 
D)  Inflation expectations fall which shifts the short-run Phillips curve to the left. 
A)  Inflation expectations rise which shifts the short-run Phillips curve to the right. 
B)  Inflation expectations rise which shifts the short-run Phillips curve to the left. 
C)  Inflation expectations fall which shifts the short-run Phillips curve to the right. 
D)  Inflation expectations fall which shifts the short-run Phillips curve to the left.

Question 3

Figure 35-9. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."    
-Refer to Figure 35-9. Which of the following events could explain the shift of the aggregate-supply curve from AS1 to AS2?

Accepted Answer

A)  a reduction in firms' costs of production 
B)  a reduction in taxes on consumers 
C)  an increase in the price level 
D)  an increase in the world price of oil 
A)  a reduction in firms' costs of production 
B)  a reduction in taxes on consumers 
C)  an increase in the price level 
D)  an increase in the world price of oil

Question 4

What evidence does the Volcker disinflation provide concerning the importance of inflation expectations to the costs of disinflation?

Accepted Answer

Unemployment did rise. However, the sacr

Question 5

The government of Blenova considers two policies. Policy A would shift AD right by 500 units while policy B would shift AD right by 300 units. According to the short-run Phillips curve, policy A will lead

Accepted Answer

A)  to a lower unemployment rate and a lower inflation rate than policy B. 
B)  to a lower unemployment rate and a higher inflation rate than policy B. 
C)  to a higher unemployment rate and lower inflation rate than policy B. 
D)  to a higher unemployment rate and higher inflation rate than policy B. 
A)  to a lower unemployment rate and a lower inflation rate than policy B. 
B)  to a lower unemployment rate and a higher inflation rate than policy B. 
C)  to a higher unemployment rate and lower inflation rate than policy B. 
D)  to a higher unemployment rate and higher inflation rate than policy B.

Question 6

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

Accepted Answer

A)  adverse supply shocks that shifted the short-run Phillips curve left. 
B)  adverse supply shocks that shifted the short-run Phillips curve right. 
C)  favorable supply shocks that shifted the short-run Phillips curve left. 
D)  favorable supply shocks that shifted the short-run Phillips curve right. 
A)  adverse supply shocks that shifted the short-run Phillips curve left. 
B)  adverse supply shocks that shifted the short-run Phillips curve right. 
C)  favorable supply shocks that shifted the short-run Phillips curve left. 
D)  favorable supply shocks that shifted the short-run Phillips curve right.

Question 7

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

Accepted Answer

A)  could not be extended to other countries, despite many researchers' attempts to provide that extension. 
B)  was quickly extended to other countries by researchers. 
C)  was extended to only one other country - the United States. 
D)  was harshly criticized by the American economists Paul Samuelson and Robert Solow on the grounds that Phillips's study was fundamentally flawed. 
A)  could not be extended to other countries, despite many researchers' attempts to provide that extension. 
B)  was quickly extended to other countries by researchers. 
C)  was extended to only one other country - the United States. 
D)  was harshly criticized by the American economists Paul Samuelson and Robert Solow on the grounds that Phillips's study was fundamentally flawed.

Question 8

In the late 1960's, Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Accepted Answer

A)  existed in the long run and the short run. 
B)  existed in the long run but not the short run. 
C)  existed in the short run but not the long run. 
D)  did not exist. 
A)  existed in the long run and the short run. 
B)  existed in the long run but not the short run. 
C)  existed in the short run but not the long run. 
D)  did not exist.

Question 9

Which of the following is downward-sloping?

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 short-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 short-run Phillips curve, but not the long-run aggregate-supply curve

Question 10

The long-run Phillips curve would shift left if

Accepted Answer

A)  the money supply increased or if the minimum wage was reduced. 
B)  the money supply increased but not if the minimum wage was reduced. 
C)  the minimum wage was reduced but not if the money supply increased. 
D)  None of the above is correct. 
A)  the money supply increased or if the minimum wage was reduced. 
B)  the money supply increased but not if the minimum wage was reduced. 
C)  the minimum wage was reduced but not if the money supply increased. 
D)  None of the above is correct.

Question 11

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Accepted Answer

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

Question 12

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Accepted Answer

A)  Mark gets an increase in his nominal wage. 
B)  Bob gets more job offers. 
C)  Susan reduces prices at her pizza restaurant. 
D)  Tom reads that the central bank recently raised the money supply 
A)  Mark gets an increase in his nominal wage. 
B)  Bob gets more job offers. 
C)  Susan reduces prices at her pizza restaurant. 
D)  Tom reads that the central bank recently raised the money supply

Question 13

Neither monetary policy nor any government policy can change the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

What is meant by accommodation?

Accepted Answer

A central bank is said to acco

Question 16

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

Accepted Answer

A)  the actual rate of inflation equals the expected rate of inflation. 
B)  the actual rate of unemployment equals the natural rate of unemployment. 
C)  Both A and B are correct. 
D)  None of the above is correct. 
A)  the actual rate of inflation equals the expected rate of inflation. 
B)  the actual rate of unemployment equals the natural rate of unemployment. 
C)  Both A and B are correct. 
D)  None of the above is correct.

Question 17

The long-run response to an increase in the growth rate of the money supply is shown by shifting

Accepted Answer

A)  the short-run and long-run Phillips curves left. 
B)  the short-run and long-run Phillips curves right. 
C)  only the short-run Phillips curve left. 
D)  only the short-run Phillips curve right. 
A)  the short-run and long-run Phillips curves left. 
B)  the short-run and long-run Phillips curves right. 
C)  only the short-run Phillips curve left. 
D)  only the short-run Phillips curve right.

Question 18

If unemployment is below its natural rate, what happens to move the economy to long-run equilibrium?

Accepted Answer

A)  Inflation expectations rise which shifts the short-run Phillips curve to the right. 
B)  Inflation expectations rise which shifts the short-run Phillips curve to the left. 
C)  Inflation expectations fall which shifts the short-run Phillips curve to the right. 
D)  Inflation expectations fall which shifts the short-run Phillips curve to the left. 
A)  Inflation expectations rise which shifts the short-run Phillips curve to the right. 
B)  Inflation expectations rise which shifts the short-run Phillips curve to the left. 
C)  Inflation expectations fall which shifts the short-run Phillips curve to the right. 
D)  Inflation expectations fall which shifts the short-run Phillips curve to the left.

Question 19

If the central bank decreases the money supply, then output

Accepted Answer

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

Question 20

According to the Friedman-Phelps analysis, in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Accepted Answer

A) True 
 B)False

Exam 35: The Short-Run Trade-Off Between Inflation and Unemployment

A favorable supply shock will cause the price level

If unemployment is above its natural rate, what happens to move the economy to long-run equilibrium?

What evidence does the Volcker disinflation provide concerning the importance of inflation expectations to the costs of disinflation?

The government of Blenova considers two policies. Policy A would shift AD right by 500 units while policy B would shift AD right by 300 units. According to the short-run Phillips curve, policy A will lead

During the mid and last part of the 1990's both inflation and unemployment were low. In general this could have been the result of

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

In the late 1960's, Milton Friedman and Edmund Phelps argued that a tradeoff between inflation and unemployment

Which of the following is downward-sloping?

The long-run Phillips curve would shift left if

Sticky wages leads to a positive relationship between the actual price level and the quantity of output supplied in

Which of the following would we not expect if government policy moves the economy up along a given short-run Phillips curve?

Neither monetary policy nor any government policy can change the natural rate of unemployment.

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

What is meant by accommodation?

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

The long-run response to an increase in the growth rate of the money supply is shown by shifting

If unemployment is below its natural rate, what happens to move the economy to long-run equilibrium?

If the central bank decreases the money supply, then output

According to the Friedman-Phelps analysis, in the long run actual inflation equals expected inflation and unemployment is at its natural rate.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

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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