Exam 34: The Trade-Off between Inflation and Unemployment

Aggregate demand grows because

Which of the following is most likely to lead to demand-side inflation?

If the aggregate supply curve is vertical, then the short-run Phillips curve will

Which of the following is most likely to result in unemployment?

The Phillips curve shows the relationship between the rate of inflation and the rate of growth of real GDP.

Figure 17-1 -Which of the following is true about the economy depicted in Figure 17-1?

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

Based on the evidence, most economists believe that the self-correcting mechanism operates

If workers expect inflation, and tend to overestimate actual inflation when they negotiate wage increases, the result will be a continuing

The Phillips curve is built on the assumption that business fluctuations are

An economy eliminates a recessionary gap by reducing wages and prices.

Adverse shocks such as the crop failures of 1972-1973 and the oil price increases of 1974 and 1979 pushed the economy's

A study of the U.S.price level and real GDP from 1972 to 2007 reveals a clear upward march toward higher prices and greater output.What explains this?

The theory of rational expectations says that

Define the following terms and explain their importance to the study of macroeconomics: a.Phillips curve b.rational expectations c.indexing d.stagflation

The economy's self-correcting mechanism to eliminate a recessionary gap relies on

Aggregate supply tends to grow because

In the fall of 2007, most economists felt that the

As a generalization, it can be said that

Monetarists typically favor strong policy measures to fight recession.