Exam 17: The Trade Off Between Inflation and Unemployment

European governments accepted prolonged periods of unemployment in the 1990s in order to reduce inflation.

Which of the following could trigger demand-side inflation?

The Phillips curve shows the relationship between

The suggestion that the Fed concentrate only on reducing inflation is an attempt to

Figure 17-8 -In Figure 17-8,the aggregate supply curve is shifting inward as we move from

Figure 17-8 -In Figure 17-8,policy makers can choose any of the following points as sustainable inflation-unemployment combinations:

What are some of the possible ways in which we could reduce the natural rate of unemployment?

Which term refers to provisions in a law or a contract whereby monetary payments are automatically adjusted whenever a specified price index changes?

Figure 17-6 -The short-run Phillips curve in Figure 17-6 would include which of the following points?

If workers underestimate inflation,the aggregate supply curve will tend to be

If inflationary expectations are quite sluggish (that is,they do not adapt quickly),then the short-run Phillips curve will

If expectations are rational,the difference between the actual rate of inflation and the expected rate of inflation will be zero.

In December of 2007,with an unemployment rate of 5.0 percent,most economists believed this was above the natural rate.

Every year from 1954 to 1984,the U.S.economy was characterized by higher output and lower prices.

Figure 17-3 -Given the situation in graph (1)in Figure 17-3,what can be expected to change in graph (1)when the economy's self-correcting mechanism operates?

The economy's self-correcting mechanism always tends to push the unemployment rate back toward a specific rate of unemployment called

The main process by which a recessionary gap is eliminated is a(n)

If nominal wages increase at the same rate as inflation,then the aggregate supply curve will be a horizontal line.

Policy makers who believe that the costs of inflation are very high will tend to favor which of the following during an inflationary gap?

If policy makers do nothing in a recessionary gap,the most likely outcome is a