Question 1

The origin of the Phillips curve is the idea that an increase in

Accepted Answer

A)  AD will lead to more inflation and more unemployment. 
B)  AD will lead to more inflation and lower unemployment. 
C)  AS will lead to lower inflation and lower unemployment. 
D)  AS will lead to less inflation and higher unemployment. 
A)  AD will lead to more inflation and more unemployment. 
B)  AD will lead to more inflation and lower unemployment. 
C)  AS will lead to lower inflation and lower unemployment. 
D)  AS will lead to less inflation and higher unemployment.

Question 2

Demand-side inflation is usually accompanied by increasing real GDP,while supply-side inflation is usually accompanied by falling real GDP.

Accepted Answer

A) True 
 B)False

Question 3

Figure 17-8  
-In Figure 17-8,which of the following movements reflects the closing of a recessionary gap through the economy's self-correcting mechanism?

Accepted Answer

A)  A to B 
B)  A to C 
C)  C to E 
D)  D to E 
A)  A to B 
B)  A to C 
C)  C to E 
D)  D to E

Question 4

During the 1960s and early 1970s,economists believed that the Phillips curve indicated

Accepted Answer

A)  that higher inflation was the price for more unemployment. 
B)  that higher levels of employment could be achieved with lower inflation. 
C)  a menu of choices for policy makers. 
D)  All of the above are correct. 
A)  that higher inflation was the price for more unemployment. 
B)  that higher levels of employment could be achieved with lower inflation. 
C)  a menu of choices for policy makers. 
D)  All of the above are correct.

Question 5

If policy makers do nothing in response to an inflationary gap,what will happen?

Accepted Answer

A)  a rapid movement toward lower unemployment and higher inflation 
B)  a rapid movement toward lower unemployment and lower inflation 
C)  a slow movement toward higher unemployment and higher inflation 
D)  a slow movement toward lower unemployment and lower inflation 
A)  a rapid movement toward lower unemployment and higher inflation 
B)  a rapid movement toward lower unemployment and lower inflation 
C)  a slow movement toward higher unemployment and higher inflation 
D)  a slow movement toward lower unemployment and lower inflation

Question 6

The aggregate supply curve slopes upward when the real wage falls initially as the price level rises.

Accepted Answer

A) True 
 B)False

Question 7

What is the effect of supply-side inflation on the short-run Phillips curve?

Accepted Answer

The short-run Phillips curve is drawn on

Question 8

According to the theory of rational expectations,the government can influence output

Accepted Answer

A)  with appropriate fiscal and monetary policy. 
B)  in the short run,but not in the long run. 
C)  without affecting the price level. 
D)  only by making unexpected changes in aggregate demand. 
A)  with appropriate fiscal and monetary policy. 
B)  in the short run,but not in the long run. 
C)  without affecting the price level. 
D)  only by making unexpected changes in aggregate demand.

Question 9

If unemployment and inflation always move in the same direction,then we can infer that business fluctuations are

Accepted Answer

A)  from the demand side. 
B)  from the supply side. 
C)  from both the demand and supply side. 
D)  purely random events. 
A)  from the demand side. 
B)  from the supply side. 
C)  from both the demand and supply side. 
D)  purely random events.

Question 10

According to the theory of rational expectations,errors in predicting inflation will

Accepted Answer

A)  be biased upward more often than not. 
B)  be purely random. 
C)  tend to be biased downward when inflation is rising,and tend to be biased upward when inflation is falling. 
D)  tend to be biased upward when inflation is rising,and tend to be biased downward when inflation is falling. 
A)  be biased upward more often than not. 
B)  be purely random. 
C)  tend to be biased downward when inflation is rising,and tend to be biased upward when inflation is falling. 
D)  tend to be biased upward when inflation is rising,and tend to be biased downward when inflation is falling.

Question 11

If AS increases at a faster rate than AD,the result will be

Accepted Answer

A)  demand-side inflation. 
B)  supply-side inflation. 
C)  falling prices. 
D)  stable prices. 
A)  demand-side inflation. 
B)  supply-side inflation. 
C)  falling prices. 
D)  stable prices.

Question 12

If the short-run Phillips curve has a very steep slope,the

Accepted Answer

A)  structural deficit will grow during inflation. 
B)  structural deficit will fall during recession. 
C)  inflation costs of reducing unemployment are relatively low. 
D)  inflation costs of reducing unemployment are relatively high. 
A)  structural deficit will grow during inflation. 
B)  structural deficit will fall during recession. 
C)  inflation costs of reducing unemployment are relatively low. 
D)  inflation costs of reducing unemployment are relatively high.

Question 13

One explanation for the increase in the natural rate of unemployment in 2010 was a mismatch between the skills of the American labor force and the skills that the modern job market demanded.

Accepted Answer

A) True 
 B)False

Question 14

Figure 17-3  
-Given the situation in graph (1)in Figure 17-3,what movement would be expected in graph (2)from the economy's self-correcting mechanism?

Accepted Answer

A)  A to B 
B)  A to D 
C)  C to E 
D)  D to C 
A)  A to B 
B)  A to D 
C)  C to E 
D)  D to C

Question 15

Which of the following could trigger supply-side inflation?

Accepted Answer

A)  a decrease in the wage rate for all workers 
B)  an increase in raw materials' prices 
C)  an increase in productivity of capital 
D)  an increase in the labor force 
A)  a decrease in the wage rate for all workers 
B)  an increase in raw materials' prices 
C)  an increase in productivity of capital 
D)  an increase in the labor force

Question 16

If workers expect inflation,and negotiate wage increases that exactly match price increases,the result is a

Accepted Answer

A)  horizontal aggregate supply curve at the level of potential GDP. 
B)  vertical aggregate supply curve at the level of potential GDP. 
C)  horizontal aggregate demand curve at the level of potential GDP. 
D)  vertical aggregate demand curve at the level of potential GDP. 
A)  horizontal aggregate supply curve at the level of potential GDP. 
B)  vertical aggregate supply curve at the level of potential GDP. 
C)  horizontal aggregate demand curve at the level of potential GDP. 
D)  vertical aggregate demand curve at the level of potential GDP.

Question 17

Figure 17-8  
-In Figure 17-8,which of the following movements illustrates the response of the economy to a stimulation of aggregate demand when workers systematically underpredict inflation?

Accepted Answer

A)  C to A 
B)  C to B 
C)  C to D 
D)  C to E 
A)  C to A 
B)  C to B 
C)  C to D 
D)  C to E

Question 18

If economic fluctuations originate on the supply side,

Accepted Answer

A)  there will be no relationship between unemployment and inflation. 
B)  real wage increases will be necessary to eliminate unemployment. 
C)  inflation and unemployment will be negatively related. 
D)  inflation and unemployment will be positively related. 
A)  there will be no relationship between unemployment and inflation. 
B)  real wage increases will be necessary to eliminate unemployment. 
C)  inflation and unemployment will be negatively related. 
D)  inflation and unemployment will be positively related.

Question 19

An increase in aggregate demand will reduce the unemployment rate only if the ensuing inflation is anticipated.

Accepted Answer

A) True 
 B)False

The origin of the Phillips curve is the idea that an increase in

Demand-side inflation is usually accompanied by increasing real GDP,while supply-side inflation is usually accompanied by falling real GDP.

Figure 17-8 -In Figure 17-8,which of the following movements reflects the closing of a recessionary gap through the economy's self-correcting mechanism?

During the 1960s and early 1970s,economists believed that the Phillips curve indicated

If policy makers do nothing in response to an inflationary gap,what will happen?

The aggregate supply curve slopes upward when the real wage falls initially as the price level rises.

What is the effect of supply-side inflation on the short-run Phillips curve?

According to the theory of rational expectations,the government can influence output

If unemployment and inflation always move in the same direction,then we can infer that business fluctuations are

According to the theory of rational expectations,errors in predicting inflation will

If AS increases at a faster rate than AD,the result will be

If the short-run Phillips curve has a very steep slope,the

One explanation for the increase in the natural rate of unemployment in 2010 was a mismatch between the skills of the American labor force and the skills that the modern job market demanded.

Figure 17-3 -Given the situation in graph (1)in Figure 17-3,what movement would be expected in graph (2)from the economy's self-correcting mechanism?

Which of the following could trigger supply-side inflation?

If workers expect inflation,and negotiate wage increases that exactly match price increases,the result is a

Figure 17-8 -In Figure 17-8,which of the following movements illustrates the response of the economy to a stimulation of aggregate demand when workers systematically underpredict inflation?

If economic fluctuations originate on the supply side,

An increase in aggregate demand will reduce the unemployment rate only if the ensuing inflation is anticipated.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

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Exam 17: The Trade Off Between Inflation and Unemployment

The origin of the Phillips curve is the idea that an increase in

Demand-side inflation is usually accompanied by increasing real GDP,while supply-side inflation is usually accompanied by falling real GDP.

Figure 17-8 -In Figure 17-8,which of the following movements reflects the closing of a recessionary gap through the economy's self-correcting mechanism?

During the 1960s and early 1970s,economists believed that the Phillips curve indicated

If policy makers do nothing in response to an inflationary gap,what will happen?

The aggregate supply curve slopes upward when the real wage falls initially as the price level rises.

What is the effect of supply-side inflation on the short-run Phillips curve?

According to the theory of rational expectations,the government can influence output

If unemployment and inflation always move in the same direction,then we can infer that business fluctuations are

According to the theory of rational expectations,errors in predicting inflation will

If AS increases at a faster rate than AD,the result will be

If the short-run Phillips curve has a very steep slope,the

One explanation for the increase in the natural rate of unemployment in 2010 was a mismatch between the skills of the American labor force and the skills that the modern job market demanded.

Figure 17-3 -Given the situation in graph (1)in Figure 17-3,what movement would be expected in graph (2)from the economy's self-correcting mechanism?

Which of the following could trigger supply-side inflation?

If workers expect inflation,and negotiate wage increases that exactly match price increases,the result is a

Figure 17-8 -In Figure 17-8,which of the following movements illustrates the response of the economy to a stimulation of aggregate demand when workers systematically underpredict inflation?

If economic fluctuations originate on the supply side,

An increase in aggregate demand will reduce the unemployment rate only if the ensuing inflation is anticipated.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters