Exam 8: Inflation: Its Causes and Cures

A once-and-for-all increase in the price of a raw material, such as crude oil, will

If the SP curve is steep then monetary and fiscal policy will have a ________ effect on inflation and a ________ effect on unemployment.

In the short-run, the impact of an adverse supply shock is to

A policy to slow the growth of nominal GDP

Supply inflation is triggered by changes in

After a period of sustained unexpected inflation, it is likely that the renegotiation of nominal wages will

Which of the following was a beneficial supply shock in the United States in the late 1990s?

In the diagram displaying Okun's law, the data points loop around the summarizing "Okun's law line" in a ________ direction because the unemployment rate reacts to changes in production ________.

If firms have only a weak tendency to raise markups during cyclical expansions, or if there are only a few auction markets in raw materials, then

The "long-run Phillips Curve" is the set of points for which

When the actual inflation rate is equal to the expected inflation rate the economy will be ________ and the SP curve will ________.

Along the SP curve with expected inflation of 4 percent, we are below the natural GDP when

From an initial situation where P = 1.00 and Y = 100, 6 percent nominal GDP growth that causes P to go to 1.02 also causes Y to go to

An adverse supply shock will shift the short-run Phillips Curve

While the actual inflation rate in the United States in 1998 was about 1.0 percent, demand-only models of the economy had predicted that inflation would be roughly

Continuous inflation requires repeated ________ shifts of the SAS curve, accompanied by continuous ________ of price expectations.

If nominal GDP growth in an economy is a constant 7 percent, the economy's long-run equilibrium is at Y equal to ________ with inflation of ________.

A policy response to a beneficial supply shock which allows the full impact of the shock to increase the output ratio is

The introduction of a single currency or "Euro" in 1999 ________ the likelihood that inflation rates will converge in countries that join the Euro.

Figure 8-6 -In the figure above, a beneficial supply shock accompanied by an accommodating policy takes us along path