Exam 28: Inflation, Unemployment, and Federal Reserve Policy

A falling price level is called ________ and a fall in the rate of inflation is called ________.

According to the short-run Phillips curve, the unemployment rate and the inflation rate are

According to the "rational expectations" school of thought in macroeconomics, the short-run Phillips curve is ________ in face of anticipated changes in monetary policy.

What can the Federal Reserve do to increase the natural rate of unemployment?

In a graph of unemployment rates (on the horizontal axis) versus inflation rates (on the vertical axis), the short-run Phillips Curve is

If the economy experiences a negative supply shock, which of the following will be true?

If the Phillips curve represents a "________ relationship," then the trade-off between unemployment and inflation is permanent.

The FOMC no longer sets targets for M1 and M2 to meet its goals of price stability and high employment.

If unemployment persists for a long period of time, the natural rate of unemployment rises.

What impact does expansionary monetary policy have on the short-run Phillips curve if consumers and firms expect the expansionary monetary policy to increase inflation?

Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent, how do you expect inflation to change?

If actual inflation is less than expected inflation, actual real wages will be ________ expected real wages and unemployment will ________.

A decrease in aggregate demand will

Models that focus on factors such as technology shocks rather than "monetary" explanations of fluctuations in real GDP are called

It has been argued that the experience of Paul Volcker's fight against inflation during the late 1970s and early 1980s indicates that firms and workers

Why is the credibility of the Fed's policy announcements particularly important?

Between December 2015 and mid-2017, the Federal Open Market Committee raised its target for the federal funds rate four times, and indicated that future increases were planned. General Motors and Toll Brothers faced significant consequences in 2017 from these increases in the federal funds rate target., where higher interest rates were considered partly responsible for sales declines of new automobiles and houses. This decrease in demand would result in a(n) ________ in employment and a(n) ________ in prices for General Motors and Toll Brothers.

The natural rate of unemployment equals

A relationship that depends on the basic behavior of consumers and firms and remains unchanged over long periods is called a ________ relationship.

Disinflation refers to