Exam 16: Inflation, Disinflation, and Deflation

Use the following to answer questions: -(Figure: Classical Model of the Price Level) Refer to Figure: Classical Model of the Price Level. If the central bank increases the money supply such that aggregate demand shifts from AD₁ to AD₂, according to this classical model, the price level will:

If the Fed increases the monetary base by $40 billion through open-market operations:

If an economy has just had a serious recession but real GDP is expanding once again, we can expect the unemployment rate to:

Debt deflation is the _____ in aggregate _____ caused by deflation.

If a high inflation rate leads people to _____ their money holdings, this may lead to a further increase in the money supply and _____ inflation.

Politicians have an incentive to push the unemployment rate below the natural rate of unemployment right before their reelection because the:

If workers expect a lower rate of inflation, the short-run Phillips curve will:

Fiat money is:

A liquidity trap results from:

When Fed officials worried about the possibility of "Japanification" in the United States, it meant that they were worried that the U.S. economy would:

If the monetary authorities decide to increase the nominal money supply by 10% when the economy is at its full-employment level of output, in the long run the aggregate price level increases by _____% and real GDP _____.

When the output gap is _____, reflecting an inflationary gap, the unemployment rate is _____ the natural rate of unemployment.

The U.S. government reports a core inflation rate that excludes _____ and _____ prices to remove the volatility of those two sectors from inflation estimates.

What distinction did Zimbabwe achieve in June 2008?

Use the following to answer questions: -(Figure: Short-Run Phillips Curve) Refer to Figure: Short-Run Phillips Curve. SRPC₂ is based on an expected inflation rate of:

When the Treasury Department borrows from the public to finance the government's purchases of goods and services and the Fed buys the debt back from the public in the form of Treasury bills, it is known as:

In the classical model of the price level, there is no distinction between the short run and the long run.

During hyperinflation in Germany in 1922-1923, prices rose at _____% per day.

When real output growth is above potential output growth, the output gap is positive and the unemployment rate is below the natural rate.

A supply shock caused by an increase in the price of gasoline causes a(n) _____ in output and a(n) _____ in prices.