Exam 17: The Trade Off Between Inflation and Unemployment

Figure 17-8 -In Figure 17-8,which of the following movements illustrates the response of the economy to an increase in aggregate demand when expectations are "rational"?

If the fluctuations in the economy's real growth rate from year to year are caused primarily by variations in the rate at which aggregate supply increases,then data would show

Figure 17-5 -The data illustrated in Figure 17-5 would be most representative of which decade?

One piece of evidence that business fluctuations are caused by demand-side changes would be that

If the U.S.economy had grown faster than it actually did from 2009 to 2010,the unemployment rate would have been higher.

Aggregate supply tends to grow because

One reason that the Phillips curve "broke down" is that it

The economy's self-correcting mechanism to eliminate a recessionary gap relies on

If actual inflation differs from expected inflation,what is the slope of the Phillips curve?

Figure 17-8 -In Figure 17-8,which of the following movements reflects the closing of an inflationary gap through the economy's automatic adjustment mechanism?

Figure 17-7 -In Figure 17-7,the case for expansionary monetary policy and fiscal policy is strongest at point

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

Figure 17-7 -In Figure 17-7,the only sustainable long-run equilibrium position is at point

Adverse shocks such as the crop failures of 1972-1973 and the oil price increases of 1974 and 1979 pushed the economy's

Figure 17-8 -In Figure 17-8,which of the following movements reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy?

If actual inflation differs from expected inflation,what is the slope of the aggregate supply curve?

The supply-side shocks of the 1970s shifted the aggregate supply curve inward.

The economy's self-correcting mechanism ensures that neither recessionary nor inflationary gaps will be eliminated eventually.

Opponents of indexing fear that it will lead to a(n)

Policy makers who believe that the costs of unemployment are very high will tend to favor which of the following during a recessionary gap?