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

An increase in the natural rate of unemployment shifts the short-run Phillips curve to the . If the central bank sees the increase in the unemployment rate, but thinks the natural rate has remained the same and so wants to reduce unemployment, it would the money supply growth rate. If it maintains this money supply growth rate, eventually the short run Phillips curve will shift and unemployment will be .

If the economy is at the point where the short-run Phillips curve intersects the long-run Phillips curve,

A central bank sets out to reduce unemployment by changing the money supply growth rate. The long-run Phillips curve shows that in comparison to their original rates, this policy will eventually lead to

Suppose that money supply growth increases. In the long run, this increases employment according to

Samuelson and Solow believed that the Phillips curve

If asset prices fall and inflation expectations remain unchanged, what happens to inflation and unemployment? Defend your answer.

If people correctly anticipate that inflation will fall by 1%, then

According to the Phillips curve, unemployment and inflation are positively related in

In his famous article published in an economics journal in 1958, A.W. Phillips

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

How is a decrease in the natural rate of unemployment shown in the Phillips curve diagram? Does this decrease change the inflation rate?

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

If policymakers accommodate an adverse supply shock, then in the short run the unemployment rate

The arguments of Friedman and Phelps would suggest that other things the same, a country that pursues a disinflationary policy that the public does not find completely credible

Country A has a higher money supply growth rate and a long-run Phillips curve that is farther to the left than country B's. In the long run as compared to country B, country A will have

For a number of years Canada and many European countries have had higher average unemployment rates than the United States. The Phillips curve suggests that these countries

According to the long-run Phillips curve, if the Fed increases the growth rate of the money supply, what happens to the inflation rate and the unemployment rate in the long run?

In the long run, an increase in the money supply growth rate

If the short-run Phillips curve were stable, which of the following would be unusual?

If the Fed wants to reverse the effects of a favorable supply shock on the inflation rate, it should