Question 1

________ will cause a movement along the modern Phillips curve.

Accepted Answer

A) An increase in oil prices 
B) An increase in the price of imports 
C) Wage agreements that include compensation for inflation 
D) all of the above 
E) none of the above 
A) An increase in oil prices 
B) An increase in the price of imports 
C) Wage agreements that include compensation for inflation 
D) all of the above 
E) none of the above

Question 2

If the Fed were to announce that fighting inflation is not a high priority for the immediate future ________.

Accepted Answer

A) households might expect higher inflation 
B) the short run aggregate supply would shift upwards 
C) firms might begin raising their prices to keep up with expected inflation 
D) all of the above 
E) none of the above 
A) households might expect higher inflation 
B) the short run aggregate supply would shift upwards 
C) firms might begin raising their prices to keep up with expected inflation 
D) all of the above 
E) none of the above

Question 3

Milton Friedman and Edmund Phelps contributed which insight(s)to Phillips curve analysis?

Accepted Answer

A) that firms and workers care about nominal,not real wages 
B) that wages have a one-to-one relationship with inflation 
C) that,in the long run,the level of unemployment is independent of inflation 
D) all of the above 
E) none of the above 
A) that firms and workers care about nominal,not real wages 
B) that wages have a one-to-one relationship with inflation 
C) that,in the long run,the level of unemployment is independent of inflation 
D) all of the above 
E) none of the above

Question 4

Based on the data in this table,   If the natural rate of unemployment is steady at 8 percent,what is the inflation rate in period 3?

Accepted Answer

A) 8.5 percent 
B) 7.5 percent 
C) 5.5 percent 
D) 6.3 percent 
E) none of the above 
A) 8.5 percent 
B) 7.5 percent 
C) 5.5 percent 
D) 6.3 percent 
E) none of the above

Question 5

-Based on the graph above,suppose the economy is at point 2,then output falls to 10 and there is a price shock of one percent.The inflation rate next period will be ________ percent.

Accepted Answer

A) 5 
B) 3.5 
C) 4.5 
D) 4 
E) none of the above 
A) 5 
B) 3.5 
C) 4.5 
D) 4 
E) none of the above

Question 6

According to the short-run aggregate supply curve,if output minus potential output equals zero,then ________.

Accepted Answer

A) unemployment might be zero 
B) inflation might be stable 
C) expected inflation must be stable 
D) price shocks must be zero 
E) none of the above 
A) unemployment might be zero 
B) inflation might be stable 
C) expected inflation must be stable 
D) price shocks must be zero 
E) none of the above

Question 7

Which of the following is true in regards to Okun's law?

Accepted Answer

A) employment does not increase commensurately with output rises because firms tend to hoard labor 
B) when demand increases,firms tend to work their employees harder and longer 
C) it is Okun's prediction of the negative relationship between the output and unemployment gaps that allows the modern Phillips curve to be translated into the AS curve 
D) all of the above 
E) none of the above 
A) employment does not increase commensurately with output rises because firms tend to hoard labor 
B) when demand increases,firms tend to work their employees harder and longer 
C) it is Okun's prediction of the negative relationship between the output and unemployment gaps that allows the modern Phillips curve to be translated into the AS curve 
D) all of the above 
E) none of the above

Question 8

The idea behind the Phillips curve is that ________.

Accepted Answer

A) tightness in the labor market puts downward pressures on wages and prices 
B) when the unemployment rate is low wages will increase 
C) when firms raise wages to attract new workers,prices decrease 
D) all of the above 
E) none of the above 
A) tightness in the labor market puts downward pressures on wages and prices 
B) when the unemployment rate is low wages will increase 
C) when firms raise wages to attract new workers,prices decrease 
D) all of the above 
E) none of the above

Question 9

According to Okun's law,an increase in which of the following is associated with an increase in unemployment?

Accepted Answer

A) inflation 
B) output 
C) expected inflation 
D) autonomous expenditure 
E) potential output 
A) inflation 
B) output 
C) expected inflation 
D) autonomous expenditure 
E) potential output

Question 10

As wages and prices become more flexible ________.

Accepted Answer

A) wages becomes less responsive to unemployment deviations from the natural rate 
B) it becomes easier to differentiate the short-run from the long-run Phillips curve 
C) inflation becomes more responsive to unemployment deviations from the natural rate 
D) all of the above 
E) none of the above 
A) wages becomes less responsive to unemployment deviations from the natural rate 
B) it becomes easier to differentiate the short-run from the long-run Phillips curve 
C) inflation becomes more responsive to unemployment deviations from the natural rate 
D) all of the above 
E) none of the above

Question 11

In the short run,if current output remains persistently above potential ________.

Accepted Answer

A) inflation will rise causing a movement along the aggregate supply curve 
B) expected inflation will rise causing an upward shift of the aggregate supply curve 
C) the aggregate supply curve will shift until current output returns to its potential level 
D) all of the above 
E) none of the above 
A) inflation will rise causing a movement along the aggregate supply curve 
B) expected inflation will rise causing an upward shift of the aggregate supply curve 
C) the aggregate supply curve will shift until current output returns to its potential level 
D) all of the above 
E) none of the above

Question 12

-Based on the graph above,a cause of movement from point 1 to point 2 might be ________.

Accepted Answer

A) a positive price shock 
B) government policy that lowers unemployment 
C) an increase in potential output 
D) an increase in expected inflation 
E) none of the above 
A) a positive price shock 
B) government policy that lowers unemployment 
C) an increase in potential output 
D) an increase in expected inflation 
E) none of the above

Question 13

In Milton Friedman and Edmund Phelps' expectations-augmented Phillips curve,________.

Accepted Answer

A) unemployment will,in the long run,reach the natural rate 
B) in the long run,expected inflation will reach the NAIRU 
C) inflation is positively related to the unemployment gap 
D) all of the above 
E) none of the above 
A) unemployment will,in the long run,reach the natural rate 
B) in the long run,expected inflation will reach the NAIRU 
C) inflation is positively related to the unemployment gap 
D) all of the above 
E) none of the above

Question 14

What can be concluded from Milton Friedman and Edmund Phelps' expectations-augmented Phillips curve?

Accepted Answer

A) that there is no long run tradeoff between unemployment and inflation 
B) that there is a short run tradeoff between unemployment and inflation 
C) that there are two types of Phillips curves 
D) all of the above 
E) none of the above 
A) that there is no long run tradeoff between unemployment and inflation 
B) that there is a short run tradeoff between unemployment and inflation 
C) that there are two types of Phillips curves 
D) all of the above 
E) none of the above

Question 15

According to the accelerationist Phillips curve,________.

Accepted Answer

A) expectations adjust continually to the latest information 
B) increases in inflation cause the unemployment gap to widen 
C) inflation will change so long as an unemployment gap persists 
D) all of the above 
E) none of the above 
A) expectations adjust continually to the latest information 
B) increases in inflation cause the unemployment gap to widen 
C) inflation will change so long as an unemployment gap persists 
D) all of the above 
E) none of the above

Question 16

Milton Friedman and Edmund Phelps contributed which insight(s)to Phillips curve analysis?

Accepted Answer

A) that firms and workers care about real wages 
B) that inflation and expected inflation influence each other 
C) that,in the long run,the level of unemployment is independent of inflation 
D) all of the above 
E) none of the above 
A) that firms and workers care about real wages 
B) that inflation and expected inflation influence each other 
C) that,in the long run,the level of unemployment is independent of inflation 
D) all of the above 
E) none of the above

Question 17

A.W.Phillips' 1958 paper examined unemployment and wage growth.What role,if any,does wage growth play in the modern Phillips curve?

Accepted Answer

The modern Phillips curve relates unempl

Question 18

Observations of inflation in the 1970s prompted what further addition to the Phillips curve?

Accepted Answer

A) price shocks 
B) expected inflation 
C) personal consumption expenditures 
D) all of the above 
E) none of the above 
A) price shocks 
B) expected inflation 
C) personal consumption expenditures 
D) all of the above 
E) none of the above

Question 19

Milton Friedman and Edmund Phelps contributed which insight(s)to Phillips curve analysis?

Accepted Answer

A) that firms and workers care about nominal,not real wages 
B) that wage changes have a one-to-one relationship with changes in expected inflation 
C) that,in the long run,prices are flexible,so unemployment cannot remain above zero 
D) all of the above 
E) none of the above 
A) that firms and workers care about nominal,not real wages 
B) that wage changes have a one-to-one relationship with changes in expected inflation 
C) that,in the long run,prices are flexible,so unemployment cannot remain above zero 
D) all of the above 
E) none of the above

Question 20

In the long run ________.

Accepted Answer

A) the amount of output an economy can produce is determined by real variables like capital,labor and technological advances 
B) aggregate supply is fixed at the potential level of output 
C) there is enough time for prices to fully adjust so the classical dichotomy holds 
D) all of the above 
E) none of the above 
A) the amount of output an economy can produce is determined by real variables like capital,labor and technological advances 
B) aggregate supply is fixed at the potential level of output 
C) there is enough time for prices to fully adjust so the classical dichotomy holds 
D) all of the above 
E) none of the above

Exam 11: Aggregate Supply and the Phillips Curve

________ will cause a movement along the modern Phillips curve.

If the Fed were to announce that fighting inflation is not a high priority for the immediate future ________.

Milton Friedman and Edmund Phelps contributed which insight(s)to Phillips curve analysis?

Based on the data in this table, If the natural rate of unemployment is steady at 8 percent,what is the inflation rate in period 3?

-Based on the graph above,suppose the economy is at point 2,then output falls to 10 and there is a price shock of one percent.The inflation rate next period will be ________ percent.

According to the short-run aggregate supply curve,if output minus potential output equals zero,then ________.

Which of the following is true in regards to Okun's law?

The idea behind the Phillips curve is that ________.

According to Okun's law,an increase in which of the following is associated with an increase in unemployment?

As wages and prices become more flexible ________.

In the short run,if current output remains persistently above potential ________.

-Based on the graph above,a cause of movement from point 1 to point 2 might be ________.

In Milton Friedman and Edmund Phelps' expectations-augmented Phillips curve,________.

What can be concluded from Milton Friedman and Edmund Phelps' expectations-augmented Phillips curve?

According to the accelerationist Phillips curve,________.

Milton Friedman and Edmund Phelps contributed which insight(s)to Phillips curve analysis?

A.W.Phillips' 1958 paper examined unemployment and wage growth.What role,if any,does wage growth play in the modern Phillips curve?

Observations of inflation in the 1970s prompted what further addition to the Phillips curve?

Milton Friedman and Edmund Phelps contributed which insight(s)to Phillips curve analysis?

In the long run ________.

The Policy and Practice of Macroeconomics

Measuring Macroeconomic Data

Aggregate Production and Productivity

Saving and Investment in Closed and Open Economies

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

The Aggregate Demand and Supply Model

Macroeconomic Policy and Aggregate Demand and Supply Analysis

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

Filters