Exam 17: The Trade Off Between Inflation and Unemployment

Figure 17-6 (b)illustrates that

One of the reasons why the Phillips curve is no longer viewed as a "menu" of possible choices available to policy makers is that

The government can fight inflation by manipulating both aggregate demand and aggregate supply.

At the natural rate of unemployment,the long-run Phillips curve has a(n)

A reduction in aggregate demand will normally reduce

If employees and employers always accurately predict inflation,what is the shape of the Phillips curve?

Figure 17-8 -In Figure 17-8,which of the following points cannot be observed in the long run?

Inflation can come from the demand side or from the supply side of the economy.

Figure 17-5 -Over a five-year period,economists observed that the unemployment-inflation relationship appeared as in Figure 17-5.Economic theory would conclude that the period

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 demand increases,then data would show

Expansionary fiscal and monetary policy from 2008 to 2010,took the risk of being inflationary for the sake of avoiding additional unemployment.

Most economists think that the economy's self-correcting mechanism is

A vocal minority of economists,believers in the theory of rational expectations,insist that

In the 1970s,why did the short-run Phillips curve fail to depict the unemployment-inflation trade-off?

The U.S.economy in the 1990s benefited from an aggregate supply curve shifting outward.

If aggregate demand had grown faster than it did from 2009 to 2010,then the U.S.economy would have experienced

A decrease in the price of foreign oil will affect the U.S.economy by

A non-policy reason for the reduction in the natural rate of unemployment is the

If the short-run Phillips curve is fairly horizontal,attempts to fight inflation will generate considerable unemployment.

Figure 17-8 -In Figure 17-8,which of the following points illustrate the expansionary monetary policies of the mid-1990s and the accompanying favorable supply shocks?