Question 1

According to the Phillips curve presented in the text,a negative macroeconomic shock:

Accepted Answer

A) increases the rate of inflation. 
B) decreases the rate of inflation. 
C) has no effect on the rate of inflation. 
D) has a negative effect on the unemployment rate. 
E) has a positive effect on the unemployment rate.

Question 2

Generally speaking,the rate of inflation __________ during a recession.

Accepted Answer

A) stays the same 
B) falls 
C) rises 
D) falls,then rises 
E) none of the above

Question 3

-Consider Figure 9.4,which shows the annual inflation rate month to month.According to the Phillips curve,the period from about 2003.10 to 2005.08 is a period of ___________.

Accepted Answer

A) recession 
B) expansion 
C) stagnation 
D) none of the above 
E) Not enough information is given.

Question 4

Defining 
As current output, 
As potential output,and 
As short-run fluctuations,how can the equation

Be best defined?

Accepted Answer

A) the percentage deviation of current output from potential output 
B) the difference between current output and potential output 
C) the percentage deviation of potential output from current output 
D) the deviation of current output from potential output 
E) the difference between potential output and current output

Question 5

Potential output is defined as __________.

Accepted Answer

A) the amount of total output if all inputs were utilized at their long-run,sustainable levels 
B) what an economy produces when it is at capacity 
C) the current level of output 
D) the amount of output where inflation is zero 
E) none of the above

Question 6

If current output is 
Billion and potential output 
Billion,then the economy is in a(n)__________ and 
Is about __________.

Accepted Answer

A) recession;-4.7 percent 
B) boom;4.7 percent 
C) boom;-4.7 percent 
D) recession;- 5 percent 
E) boom;5 percent

Question 7

-Consider Figure 9.2.In approximately which of the following years was current output equal to potential output?

Accepted Answer

A) 1953,1966,1974,1979,and 2000 
B) 1954,1961,1975,1983,and 2002 
C) 1957,1964,1980,1991,and 2001 
D) 1954,1961,1975,1979,and 2000 
E) 1953,1966,1974,1983,and 2002

Question 8

If an economy has a horizontal Phillips curve and experiences an expansion,inflation:

Accepted Answer

A) falls. 
B) rises sharply. 
C) rises,but not very much. 
D) does not change. 
E) falls sharply.

Question 9

Defining u as the unemployment rate and u¯ as the natural rate of unemployment,Okun's law is given by  
.

Accepted Answer

A) True 
 B)False

Question 10

A country with a steep Phillips curve experiences a smaller increase in the rate of inflation than a country with a relatively flat Phillips curve,assuming the size of the positive demand shock in each country is the same.

Accepted Answer

A) True 
 B)False

Question 11

In 1980,the inflation rate reached about 14 percent.The Federal Reserve __________ interest rates,sending the economy into a(n)__________.When doing so,the Federal Reserve knew this would be the case because of the __________.

Accepted Answer

A) raised;expansion;Phillips curve 
B) raised;recession;Phillips curve 
C) raised;recession;Okun relationship 
D) decreased;recession;Phillips curve 
E) decreased;expansion;Phillips curve

Question 12

Taken together,the Phillips curve and Okun's law imply there is a __________ relationship between __________ and unemployment.

Accepted Answer

A) positive;inflation 
B) negative;inflation 
C) negative;interest rates 
D) positive;interest rates 
E) Not enough information is given.

Question 13

-Figure 9.6 below shows the output gap for the years 1990-2010.Using the Phillips curve and Okun's law,discuss the impacts on inflation and unemployment for the years 1997-2000 and 2008-2010.From this analysis,what is the relationship between unemployment and inflation?

Accepted Answer

The answer of 
-Figure 9.6 below shows the output gap...

Question 14

The relationship between actual output in an economy,the long-run component,and the short-run component is given as: Current output = Long-run trend + Short-run fluctuations

Accepted Answer

A) True 
 B)False

Question 15

Defining u as the unemployment rate and 
As the natural rate of unemployment,Okun's law is given by the following equation:

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 16

Okun's law shows the __________ relationship between __________ and __________.

Accepted Answer

A) negative;unemployment gap;economic fluctuations 
B) positive;unemployment gap;economic fluctuations 
C) negative;unemployment gap;inflation 
D) positive;unemployment gap;inflation 
E) negative;inflation;economic fluctuations

Question 17

Current output is defined as __________.

Accepted Answer

A) the amount of output when inflation is about 2 percent 
B) what an economy produces when it is at capacity 
C) the amount of total output at the current level of input utilization 
D) the amount of total output if all inputs were utilized at their long-run sustainable levels 
E) the amount of output where unemployment is zero

Question 18

What does Okun's law state?

Accepted Answer

The answer of What does Okun's law state?...

Question 19

Which of the following is not an example of a short term macroeconomic "shock"?

Accepted Answer

A) a change in the tax code 
B) pork-barrel spending 
C) increased military spending 
D) planned investment expenditures 
E) political unrest

Question 20

Defining Yt as current output,  
as potential output,and  
as short-run fluctuations,the relationship between the three can be written as  
.

Accepted Answer

A) True 
 B)False

Exam 9: An Introduction to the Short Run

According to the Phillips curve presented in the text,a negative macroeconomic shock:

Generally speaking,the rate of inflation __________ during a recession.

-Consider Figure 9.4,which shows the annual inflation rate month to month.According to the Phillips curve,the period from about 2003.10 to 2005.08 is a period of ___________.

Defining As current output, As potential output,and As short-run fluctuations,how can the equation Be best defined?

Potential output is defined as __________.

If current output is Billion and potential output Billion,then the economy is in a(n) and Is about .

-Consider Figure 9.2.In approximately which of the following years was current output equal to potential output?

If an economy has a horizontal Phillips curve and experiences an expansion,inflation:

Defining u as the unemployment rate and u¯ as the natural rate of unemployment,Okun's law is given by .

A country with a steep Phillips curve experiences a smaller increase in the rate of inflation than a country with a relatively flat Phillips curve,assuming the size of the positive demand shock in each country is the same.

In 1980,the inflation rate reached about 14 percent.The Federal Reserve interest rates,sending the economy into a(n) .When doing so,the Federal Reserve knew this would be the case because of the __.

Taken together,the Phillips curve and Okun's law imply there is a relationship between and unemployment.

-Figure 9.6 below shows the output gap for the years 1990-2010.Using the Phillips curve and Okun's law,discuss the impacts on inflation and unemployment for the years 1997-2000 and 2008-2010.From this analysis,what is the relationship between unemployment and inflation?

The relationship between actual output in an economy,the long-run component,and the short-run component is given as: Current output = Long-run trend + Short-run fluctuations

Defining u as the unemployment rate and As the natural rate of unemployment,Okun's law is given by the following equation:

Okun's law shows the relationship between and __.

Current output is defined as __________.

What does Okun's law state?

Which of the following is not an example of a short term macroeconomic "shock"?

Defining Yt as current output, as potential output,and as short-run fluctuations,the relationship between the three can be written as .

Exam 9: An Introduction to the Short Run

According to the Phillips curve presented in the text,a negative macroeconomic shock:

Generally speaking,the rate of inflation __________ during a recession.

-Consider Figure 9.4,which shows the annual inflation rate month to month.According to the Phillips curve,the period from about 2003.10 to 2005.08 is a period of ___________.

Defining As current output, As potential output,and As short-run fluctuations,how can the equation Be best defined?

Potential output is defined as __________.

If current output is Billion and potential output Billion,then the economy is in a(n) __________ and Is about __________.

-Consider Figure 9.2.In approximately which of the following years was current output equal to potential output?

If an economy has a horizontal Phillips curve and experiences an expansion,inflation:

Defining u as the unemployment rate and u¯ as the natural rate of unemployment,Okun's law is given by .

A country with a steep Phillips curve experiences a smaller increase in the rate of inflation than a country with a relatively flat Phillips curve,assuming the size of the positive demand shock in each country is the same.

In 1980,the inflation rate reached about 14 percent.The Federal Reserve __________ interest rates,sending the economy into a(n) __________.When doing so,the Federal Reserve knew this would be the case because of the __________.

Taken together,the Phillips curve and Okun's law imply there is a __________ relationship between __________ and unemployment.

-Figure 9.6 below shows the output gap for the years 1990-2010.Using the Phillips curve and Okun's law,discuss the impacts on inflation and unemployment for the years 1997-2000 and 2008-2010.From this analysis,what is the relationship between unemployment and inflation?

The relationship between actual output in an economy,the long-run component,and the short-run component is given as: Current output = Long-run trend + Short-run fluctuations

Defining u as the unemployment rate and As the natural rate of unemployment,Okun's law is given by the following equation:

Okun's law shows the __________ relationship between __________ and __________.

Current output is defined as __________.

What does Okun's law state?

Which of the following is not an example of a short term macroeconomic "shock"?

Defining Yt as current output, as potential output,and as short-run fluctuations,the relationship between the three can be written as .

If current output is Billion and potential output Billion,then the economy is in a(n) and Is about .

In 1980,the inflation rate reached about 14 percent.The Federal Reserve interest rates,sending the economy into a(n) .When doing so,the Federal Reserve knew this would be the case because of the __.

Taken together,the Phillips curve and Okun's law imply there is a relationship between and unemployment.

Okun's law shows the relationship between and __.