Question 1

In the 1990s,the United States benefited from a series of favorable supply shocks.This caused a(n)

Accepted Answer

A)  increase in inflation and unemployment. 
B)  decrease in inflation and unemployment. 
C)  increase in inflation and a decrease in unemployment. 
D)  decrease in inflation and an increase in unemployment. 
A)  increase in inflation and unemployment. 
B)  decrease in inflation and unemployment. 
C)  increase in inflation and a decrease in unemployment. 
D)  decrease in inflation and an increase in unemployment.

Question 2

The rational expectations theory claims that workers and firms will not make systematic errors when they forecast inflation.

Accepted Answer

A) True 
 B)False

Question 3

If the short-run Phillips curve has a very flat 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 4

The most extensive indexing in the United States is in

Accepted Answer

A)  interest payments on bonds or savings accounts. 
B)  government transfer payments,including Social Security benefits. 
C)  government contracts for military goods. 
D)  escalator clauses in wage and salary contracts. 
A)  interest payments on bonds or savings accounts. 
B)  government transfer payments,including Social Security benefits. 
C)  government contracts for military goods. 
D)  escalator clauses in wage and salary contracts.

Question 5

The Phillips curve shows the relationship between the rate of inflation and the rate of growth of real GDP.

Accepted Answer

A) True 
 B)False

Question 6

The theory of rational expectations says that

Accepted Answer

A)  workers make excellent choices of places to work. 
B)  workers make the best possible forecasts of inflation. 
C)  economists make rational expectations of inflation. 
D)  economists expect workers to be rational. 
A)  workers make excellent choices of places to work. 
B)  workers make the best possible forecasts of inflation. 
C)  economists make rational expectations of inflation. 
D)  economists expect workers to be rational.

Question 7

As a generalization,it can be said that

Accepted Answer

A)  aggregate demand shifts to the right every year,but aggregate supply rarely does. 
B)  aggregate supply shifts to the right every year,but aggregate demand rarely does. 
C)  both aggregate demand and aggregate supply shift to the right each year. 
D)  neither aggregate demand nor aggregate supply curve shifts to the right each year. 
A)  aggregate demand shifts to the right every year,but aggregate supply rarely does. 
B)  aggregate supply shifts to the right every year,but aggregate demand rarely does. 
C)  both aggregate demand and aggregate supply shift to the right each year. 
D)  neither aggregate demand nor aggregate supply curve shifts to the right each year.

Question 8

If an economy's resources are fully employed,

Accepted Answer

A)  a great deal of unemployment will be needed to achieve even a small reduction in inflation. 
B)  the aggregate supply curve (and thus the Phillips curve)will be flat. 
C)  the aggregate supply curve (and thus the Phillips curve)will be steep. 
D)  Both a and c are correct. 
A)  a great deal of unemployment will be needed to achieve even a small reduction in inflation. 
B)  the aggregate supply curve (and thus the Phillips curve)will be flat. 
C)  the aggregate supply curve (and thus the Phillips curve)will be steep. 
D)  Both a and c are correct.

Question 9

Define the following terms and explain their importance to the study of macroeconomics:
a.
Phillips curve
b.
rational expectations
c.
indexing
d.
stagflation

Accepted Answer

a. A Phillips curve is a graph depicting

Question 10

When the aggregate supply curve shifts adversely,what happens to the relationship shown in the Phillips curve?

Accepted Answer

A)  It is reinforced,and made more applicable for policy. 
B)  It is destroyed,and no longer applies for policy. 
C)  It is unchanged,although the curve becomes less steep. 
D)  It is unchanged,although the curve shifts inward and to the left. 
A)  It is reinforced,and made more applicable for policy. 
B)  It is destroyed,and no longer applies for policy. 
C)  It is unchanged,although the curve becomes less steep. 
D)  It is unchanged,although the curve shifts inward and to the left.

Question 11

If policy makers do nothing in response to a recessionary 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 lower 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 lower unemployment and higher inflation 
D)  a slow movement toward lower unemployment and lower inflation

Question 12

What reasons would economists give for an increase in the natural rate of unemployment that could have occurred from 2007 to 2011? What argument would suggest that the natural rate of unemployment may not have risen?

Accepted Answer

Some economists claimed that certain job

Question 13

If aggregate demand in the U.S.had grown more slowly than it actually did in 2010,the

Accepted Answer

A)  unemployment rate would have been even lower. 
B)  inflation rate would have been even lower. 
C)  unemployment rate would have been the same. 
D)  economy would have grown faster. 
A)  unemployment rate would have been even lower. 
B)  inflation rate would have been even lower. 
C)  unemployment rate would have been the same. 
D)  economy would have grown faster.

Question 14

The economy's self-correcting mechanism tends to push the unemployment rate back to a specific rate of unemployment.How?

Accepted Answer

If the economy is facing a recessionary

Question 15

A decrease in AS will trigger less inflation under which of the following conditions?

Accepted Answer

A)  AD is relatively steep. 
B)  AD is relatively flat. 
C)  AS is relatively steep. 
D)  AS is relatively flat. 
A)  AD is relatively steep. 
B)  AD is relatively flat. 
C)  AS is relatively steep. 
D)  AS is relatively flat.

Question 16

Demand-side inflation is normally accompanied by

Accepted Answer

A)  falling real GDP,while supply-side inflation may be accompanied by rising real GDP. 
B)  falling real GDP; the same is true of supply-side inflation. 
C)  rising real GDP,while supply-side inflation may be accompanied by falling real GDP. 
D)  rising real GDP; the same is true of supply-side inflation. 
A)  falling real GDP,while supply-side inflation may be accompanied by rising real GDP. 
B)  falling real GDP; the same is true of supply-side inflation. 
C)  rising real GDP,while supply-side inflation may be accompanied by falling real GDP. 
D)  rising real GDP; the same is true of supply-side inflation.

Question 17

Figure 17-7  
-In the fall of 2007,most economists felt that the

Accepted Answer

A)  unemployment was at the natural rate. 
B)  unemployment rate was below the natural rate. 
C)  inflation rate was above the natural rate. 
D)  inflation rate was below the natural rate. 
A)  unemployment was at the natural rate. 
B)  unemployment rate was below the natural rate. 
C)  inflation rate was above the natural rate. 
D)  inflation rate was below the natural rate.

Question 18

If the aggregate supply curve is vertical,then the short-run Phillips curve will

Accepted Answer

A)  be horizontal. 
B)  also be vertical. 
C)  slope upward. 
D)  slope downward. 
A)  be horizontal. 
B)  also be vertical. 
C)  slope upward. 
D)  slope downward.

Question 19

Most economists now agree that the Phillips curve demonstrates that there is

Accepted Answer

A)  an unemployment-inflation trade-off in the long run,but not in the short run. 
B)  an unemployment-inflation trade-off in both the short run and the long run. 
C)  an unemployment-inflation trade-off in the short run,but not the long run 
D)  no unemployment-inflation trade-off in either the short run or the long run. 
A)  an unemployment-inflation trade-off in the long run,but not in the short run. 
B)  an unemployment-inflation trade-off in both the short run and the long run. 
C)  an unemployment-inflation trade-off in the short run,but not the long run 
D)  no unemployment-inflation trade-off in either the short run or the long run.

Question 20

Some economists argue that there is no such thing as a short-run Phillips curve.Who are these economists and what is their argument?

Accepted Answer

The theory of rational expectations disa

In the 1990s,the United States benefited from a series of favorable supply shocks.This caused a(n)

The rational expectations theory claims that workers and firms will not make systematic errors when they forecast inflation.

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

The most extensive indexing in the United States is in

The Phillips curve shows the relationship between the rate of inflation and the rate of growth of real GDP.

The theory of rational expectations says that

As a generalization,it can be said that

If an economy's resources are fully employed,

Define the following terms and explain their importance to the study of macroeconomics: a. Phillips curve b. rational expectations c. indexing d. stagflation

When the aggregate supply curve shifts adversely,what happens to the relationship shown in the Phillips curve?

If policy makers do nothing in response to a recessionary gap,what will happen?

What reasons would economists give for an increase in the natural rate of unemployment that could have occurred from 2007 to 2011? What argument would suggest that the natural rate of unemployment may not have risen?

If aggregate demand in the U.S.had grown more slowly than it actually did in 2010,the

The economy's self-correcting mechanism tends to push the unemployment rate back to a specific rate of unemployment.How?

A decrease in AS will trigger less inflation under which of the following conditions?

Demand-side inflation is normally accompanied by

Figure 17-7 -In the fall of 2007,most economists felt that the

If the aggregate supply curve is vertical,then the short-run Phillips curve will

Most economists now agree that the Phillips curve demonstrates that there is

Some economists argue that there is no such thing as a short-run Phillips curve.Who are these economists and what is their argument?

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

Exam 17: The Trade Off Between Inflation and Unemployment

In the 1990s,the United States benefited from a series of favorable supply shocks.This caused a(n)

The rational expectations theory claims that workers and firms will not make systematic errors when they forecast inflation.

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

The most extensive indexing in the United States is in

The Phillips curve shows the relationship between the rate of inflation and the rate of growth of real GDP.

The theory of rational expectations says that

As a generalization,it can be said that

If an economy's resources are fully employed,

Define the following terms and explain their importance to the study of macroeconomics: a. Phillips curve b. rational expectations c. indexing d. stagflation

When the aggregate supply curve shifts adversely,what happens to the relationship shown in the Phillips curve?

If policy makers do nothing in response to a recessionary gap,what will happen?

What reasons would economists give for an increase in the natural rate of unemployment that could have occurred from 2007 to 2011? What argument would suggest that the natural rate of unemployment may not have risen?

If aggregate demand in the U.S.had grown more slowly than it actually did in 2010,the

The economy's self-correcting mechanism tends to push the unemployment rate back to a specific rate of unemployment.How?

A decrease in AS will trigger less inflation under which of the following conditions?

Demand-side inflation is normally accompanied by

Figure 17-7 -In the fall of 2007,most economists felt that the

If the aggregate supply curve is vertical,then the short-run Phillips curve will

Most economists now agree that the Phillips curve demonstrates that there is

Some economists argue that there is no such thing as a short-run Phillips curve.Who are these economists and what is their argument?

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