Exam 34: Inflation, Deflation, and Macro Policy

The prices of assets are included in standard measures of inflation.

With 6 percent inflation and a 1 percent nominal interest rate, the real interest rate is:

Demonstrate graphically and explain verbally the short-run Phillips curve relationship.

The effects of asset price inflation and asset price deflation generally:

A reason that the quantity theory of money has lost favor is that:

If there is inflation the:

Given the basic rule of thumb for the relationship among inflation, productivity and nominal wage increases, if wages rise by 1 percent and productivity increases 2 percent, one would predict inflation to be:

The usefulness of standard goods market price indexes for judging policy is limited because:

If expectations of inflation are greater than actual inflation, the short-run Phillips curve will eventually shift upward.

Inflation:

If the economy is at point A in the Phillips curve graph shown, what prediction would you make for unemployment in the long run?

Describe three different ways that people form expectations of inflation and give an example of each method.

The long-run Phillips curve is:

The slope of the long-run Phillips curve is thought by many economists to be:

Inflation has both benefits and costs.

A reason that the quantity theory of money has lost favor is that:

When people refer to deflation,are they generally referring to asset price deflation or goods price deflation? What is the difference between the two?

Which of the following is not one of the assumptions of the quantity theory of money?

Do economists who believe in the quantity theory of money favor an activist monetary policy? Why or why not?

Refer to the graph shown. Which of the graphs correctly depict the short-run Phillips curve with globalization?