Question 1

In a recovery phase, a falling rate of inflation means Jthat the price level is

Accepted Answer

A)  falling. 
B)  falling at an increasing rate. 
C)  rising by smaller and smaller percentages. 
D)  falling at a constant rate. 
A)  falling. 
B)  falling at an increasing rate. 
C)  rising by smaller and smaller percentages. 
D)  falling at a constant rate.

Question 2

During a recovery phase,

Accepted Answer

A)  inflation and unemployment both increase. 
B)  inflation and unemployment stay the same. 
C)  inflation and unemployment both decrease. 
D)  unemployment decreases and inflation increases. 
A)  inflation and unemployment both increase. 
B)  inflation and unemployment stay the same. 
C)  inflation and unemployment both decrease. 
D)  unemployment decreases and inflation increases.

Question 3

Figure 16-2  
-Refer to Figure 16-2. Which of the following movements represents a Phillips phase?

Accepted Answer

A)  The movement from A to B 
B)  The movement from B to C 
C)  The movement from C to D 
D)  The movement from B to A 
A)  The movement from A to B 
B)  The movement from B to C 
C)  The movement from C to D 
D)  The movement from B to A

Question 4

What are the three phases of the inflation-unemployment cycle?

Accepted Answer

A)  The expansionary phase, the full-employment phase, and the contractionary phase 
B)  The Phillips phase, the stagflation phase, and the growth phase 
C)  The Phillips phase, the stagflation phase, and the recovery phase 
D)  The expansionary phase, the stagflation phase, and the recovery phase 
A)  The expansionary phase, the full-employment phase, and the contractionary phase 
B)  The Phillips phase, the stagflation phase, and the growth phase 
C)  The Phillips phase, the stagflation phase, and the recovery phase 
D)  The expansionary phase, the stagflation phase, and the recovery phase

Question 5

Figure 16-7  
-Refer to Figure 16-7. The movement from

Accepted Answer

A)  point 1 to point 2 is representative of a recovery phase. 
B)  point 3 to point 4 is representative of a stagflation phase. 
C)  point 3 to point 2 is representative of a recovery phase. 
D)  point 4 to point 3 is representative of a Phillips phase. 
A)  point 1 to point 2 is representative of a recovery phase. 
B)  point 3 to point 4 is representative of a stagflation phase. 
C)  point 3 to point 2 is representative of a recovery phase. 
D)  point 4 to point 3 is representative of a Phillips phase.

Question 6

Figure 16-8  
-Refer to Figure 16-8. The movement from point 4 to point 5 is consistent with which inflation-unemployment phase J?

Accepted Answer

A)  Phillips phase because inflation is increasing while unemployment is falling 
B)  recovery phase because although inflation has risen, unemployment has fallen 
C)  growth phase because the economy is producing above its potential output 
D)  recovery phase because inflation and unemployment have fallen 
A)  Phillips phase because inflation is increasing while unemployment is falling 
B)  recovery phase because although inflation has risen, unemployment has fallen 
C)  growth phase because the economy is producing above its potential output 
D)  recovery phase because inflation and unemployment have fallen

Question 7

In a stagflation phase, a decrease in short-run aggregate supply will generate

Accepted Answer

A)  an increase in the inflation rate and in the unemployment rate. 
B)  an increase in the inflation rate and a decrease in the unemployment rate. 
C)  an increase in the inflation rate with no change in the unemployment rate. 
D)  a decrease in the inflation rate and an increase in the unemployment rate. 
A)  an increase in the inflation rate and in the unemployment rate. 
B)  an increase in the inflation rate and a decrease in the unemployment rate. 
C)  an increase in the inflation rate with no change in the unemployment rate. 
D)  a decrease in the inflation rate and an increase in the unemployment rate.

Question 8

In the long run, the major cause of inflation is excessive government spending.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true? Economists generally agree that

Accepted Answer

A)  the rate of inflation in the long run is determined primarily by growth in government spending. 
B)  factors other than money growth may influence the inflation rate from one year to the next, but they are not likely to cause sustained inflation. 
C)  the primary cause of inflation is increases in the money supply growth that exceed growth increases in aggregate demand. 
D)  the major causes of inflation are declining productivity coupled with excessive spending. 
A)  the rate of inflation in the long run is determined primarily by growth in government spending. 
B)  factors other than money growth may influence the inflation rate from one year to the next, but they are not likely to cause sustained inflation. 
C)  the primary cause of inflation is increases in the money supply growth that exceed growth increases in aggregate demand. 
D)  the major causes of inflation are declining productivity coupled with excessive spending.

Question 10

In the long run, monetary growth

Accepted Answer

A)  can change the unemployment rate only at the cost of increased inflation. 
B)  can change the unemployment rate while holding the inflation rate constant. 
C)  can promote economic growth. 
D)  cannot affect the factors that determine the economy's unemployment rate. 
A)  can change the unemployment rate only at the cost of increased inflation. 
B)  can change the unemployment rate while holding the inflation rate constant. 
C)  can promote economic growth. 
D)  cannot affect the factors that determine the economy's unemployment rate.

Question 11

The lowest wage that a worker would accept if offered a job is called the subsistence wage.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (YP) in the long run?

Accepted Answer

A)  If the growth rate in YP exceeds the money growth rate, there will be inflation. 
B)  If the money growth rate is less than the growth rate in YP, there will be deflation. 
C)  If the money supply grows at the same rate as growth in YP, the price level will grow at a constant rate. 
D)  If the money supply grows at the same rate as growth in YP, the price level will also increase at the same rate as growth in YP. 
A)  If the growth rate in YP exceeds the money growth rate, there will be inflation. 
B)  If the money growth rate is less than the growth rate in YP, there will be deflation. 
C)  If the money supply grows at the same rate as growth in YP, the price level will grow at a constant rate. 
D)  If the money supply grows at the same rate as growth in YP, the price level will also increase at the same rate as growth in YP.

Question 13

Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a 3% rate. Using the equation of exchange, what is the value of the long-run inflation rate, assuming constant velocity?

Accepted Answer

A)  6% 
B)  3% 
C)  1% 
D)  0% 
A)  6% 
B)  3% 
C)  1% 
D)  0%

Question 14

Which of the following is a cost of unemployment? 
I. output foregone
II. unemployment compensation that must be paid
III. rising inflation that erodes the value of money

Accepted Answer

A)  I, II, and III 
B)  I and II 
C)  I and III 
D)  II and III 
A)  I, II, and III 
B)  I and II 
C)  I and III 
D)  II and III

Question 15

Figure 16-2  
-Refer to Figure 16-2. Consider the following statement: "The nation's inflation rate rose to a record high last month, the government reported yesterday. The consumer price index jumped 0.3% in January. Coupled with the announcement earlier this month that unemployment had risen by 0.5 percentage points, the reports suggested that the first month of President Nixon's second term had gotten off to a rocky start." Which of the following movements represents the statement?

Accepted Answer

A)  The movement from A to B 
B)  The movement from B to C 
C)  The movement from C to D 
D)  The movement from C to B 
A)  The movement from A to B 
B)  The movement from B to C 
C)  The movement from C to D 
D)  The movement from C to B

Question 16

Which of the following determines the rate of inflation in the long run? 
I. the rate of money growth
II. changes in expectations about the price level
III. the rate of economic growth
IV. changes in government spending

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  I, II, and III only 
D)  I, II, III, and IV 
A)  I and II only 
B)  I and III only 
C)  I, II, and III only 
D)  I, II, III, and IV

Question 17

The relationship between inflation and unemployment suggested by the experience of the
J1960s was supported by the results in the U.S. economy from 1970 to 2010.

Accepted Answer

A) True 
 B)False

Question 18

In a recovery phase, a falling inflation rate means that the price level is rising by smaller and smaller percentages.

Accepted Answer

A) True 
 B)False

Question 19

Falling inflation means

Accepted Answer

A)  that the price level is falling from one period to the next. 
B)  that the price level is falling at a decreasing rate. 
C)  that the price level is falling at an increasing rate. 
D)  that the price level is increasing at a decreasing rate. 
A)  that the price level is falling from one period to the next. 
B)  that the price level is falling at a decreasing rate. 
C)  that the price level is falling at an increasing rate. 
D)  that the price level is increasing at a decreasing rate.

Question 20

A Phillips phase emerges because wages are
Jflexible and adjust more quickly than anticipated.

Accepted Answer

A) True 
 B)False

In a recovery phase, a falling rate of inflation means Jthat the price level is

During a recovery phase,

Figure 16-2 -Refer to Figure 16-2. Which of the following movements represents a Phillips phase?

What are the three phases of the inflation-unemployment cycle?

Figure 16-7 -Refer to Figure 16-7. The movement from

Figure 16-8 -Refer to Figure 16-8. The movement from point 4 to point 5 is consistent with which inflation-unemployment phase J?

In a stagflation phase, a decrease in short-run aggregate supply will generate

In the long run, the major cause of inflation is excessive government spending.

Which of the following statements is true? Economists generally agree that

In the long run, monetary growth

The lowest wage that a worker would accept if offered a job is called the subsistence wage.

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (Y_P) in the long run?

Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a 3% rate. Using the equation of exchange, what is the value of the long-run inflation rate, assuming constant velocity?

Which of the following is a cost of unemployment? I. output foregone II. unemployment compensation that must be paid III. rising inflation that erodes the value of money

Which of the following determines the rate of inflation in the long run? I. the rate of money growth II. changes in expectations about the price level III. the rate of economic growth IV. changes in government spending

The relationship between inflation and unemployment suggested by the experience of the J1960s was supported by the results in the U.S. economy from 1970 to 2010.

In a recovery phase, a falling inflation rate means that the price level is rising by smaller and smaller percentages.

Falling inflation means

A Phillips phase emerges because wages are Jflexible and adjust more quickly than anticipated.

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 16: Inflation and Unemployment

In a recovery phase, a falling rate of inflation means Jthat the price level is

During a recovery phase,

Figure 16-2 -Refer to Figure 16-2. Which of the following movements represents a Phillips phase?

What are the three phases of the inflation-unemployment cycle?

Figure 16-7 -Refer to Figure 16-7. The movement from

Figure 16-8 -Refer to Figure 16-8. The movement from point 4 to point 5 is consistent with which inflation-unemployment phase J?

In a stagflation phase, a decrease in short-run aggregate supply will generate

In the long run, the major cause of inflation is excessive government spending.

Which of the following statements is true? Economists generally agree that

In the long run, monetary growth

The lowest wage that a worker would accept if offered a job is called the subsistence wage.

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (YP) in the long run?

Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a 3% rate. Using the equation of exchange, what is the value of the long-run inflation rate, assuming constant velocity?

Which of the following is a cost of unemployment? I. output foregone II. unemployment compensation that must be paid III. rising inflation that erodes the value of money

Which of the following determines the rate of inflation in the long run? I. the rate of money growth II. changes in expectations about the price level III. the rate of economic growth IV. changes in government spending

The relationship between inflation and unemployment suggested by the experience of the J1960s was supported by the results in the U.S. economy from 1970 to 2010.

In a recovery phase, a falling inflation rate means that the price level is rising by smaller and smaller percentages.

Falling inflation means

A Phillips phase emerges because wages are Jflexible and adjust more quickly than anticipated.

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (Y_P) in the long run?