Question 1

A nonpolicy reason for the reduction in the natural rate of unemployment is the

Accepted Answer

A) expansionary nature of monetary policy. 
B) aging of the U.S.labor force. 
C) decline in interest rates. 
D) growing federal budget surplus. 
A) expansionary nature of monetary policy. 
B) aging of the U.S.labor force. 
C) decline in interest rates. 
D) growing federal budget surplus.

Question 2

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

Accepted Answer

A) in the 1970s and 1980s there was no inflation at all. 
B) analysis indicates there was no such "menu" in the 1960s. 
C) in the 1970s and 1980s much inflation came from the supply side. 
D) economic theory is unable to explain the curve and, therefore, it has been rejected. 
A) in the 1970s and 1980s there was no inflation at all. 
B) analysis indicates there was no such "menu" in the 1960s. 
C) in the 1970s and 1980s much inflation came from the supply side. 
D) economic theory is unable to explain the curve and, therefore, it has been rejected.

Question 3

Figure 33-3
​  
-Given the situation in graph (1) in Figure 33-3, what movement would be expected in graph (2) from the economy's self-correcting mechanism?

Accepted Answer

A) A to B 
B) A to D 
C) C to E 
D) D to C 
A) A to B 
B) A to D 
C) C to E 
D) D to C

Question 4

Figure 33-7
​  
-In Figure 33-7, the case for restrictive monetary and fiscal policy is strongest at point

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 5

If AS increases at a faster rate than AD, the result will be

Accepted Answer

A) demand-side inflation. 
B) supply-side inflation. 
C) falling prices. 
D) stable prices. 
A) demand-side inflation. 
B) supply-side inflation. 
C) falling prices. 
D) stable prices.

Question 6

The rapid advance in computer technology is one of the reasons given for the shift of the

Accepted Answer

A) aggregate demand curve outward. 
B) aggregate supply curve inward. 
C) aggregate supply curve outward. 
D) total expenditures curve upward. 
A) aggregate demand curve outward. 
B) aggregate supply curve inward. 
C) aggregate supply curve outward. 
D) total expenditures curve upward.

Question 7

Figure 33-7
​  
-In Figure 33-7, the only sustainable long-run equilibrium position is at point

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 8

Figure 33-8
​  
-In Figure 33-8, which of the following movements reflects the Fed's anti-inflationary policy of the early 1980s and the following market adjustment?

Accepted Answer

A) A to B to C 
B) E to A to B 
C) C to D to E 
D) D to E to C 
A) A to B to C 
B) E to A to B 
C) C to D to E 
D) D to E to C

Question 9

Figure 33-8
​  
-In Figure 33-8, which of the following movements reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy?

Accepted Answer

A) C to B 
B) D to C 
C) C to E 
D) D to E 
A) C to B 
B) D to C 
C) C to E 
D) D to E

Question 10

If the favorable supply shocks of the 1990s were reversed in the future, we should expect a(n)

Accepted Answer

A) increase in inflation and unemployment. 
B) decrease in inflation and unemployment. 
C) increase in inflation and a decrease in unemployment. 
D) decrease in inflation and an increase in unemployment. 
A) increase in inflation and unemployment. 
B) decrease in inflation and unemployment. 
C) increase in inflation and a decrease in unemployment. 
D) decrease in inflation and an increase in unemployment.

Question 11

Many economists think that, in the long run, the Phillips curve is

Accepted Answer

A) a horizontal line. 
B) a vertical line. 
C) the same as the short-run curve. 
D) a 45-degree line from the origin. 
A) a horizontal line. 
B) a vertical line. 
C) the same as the short-run curve. 
D) a 45-degree line from the origin.

Question 12

One explanation for the increase in the natural rate of unemployment in 2010 was a mismatch between the skills of the American labor force and the skills that the modern job market demanded.

Accepted Answer

A) True 
 B)False

Question 13

What is the effect of supply-side inflation on the short-run Phillips curve?

Accepted Answer

The short-run Phillips curve is drawn on

Question 14

Figure 33-8
​  
-In Figure 33-8, which of the following movements reflects the closing of a recessionary gap through the economy's self-correcting mechanism?

Accepted Answer

A) A to B 
B) A to C 
C) C to E 
D) D to E 
A) A to B 
B) A to C 
C) C to E 
D) D to E

Question 15

Figure 33-6
​  
-If Figure 33-6 (a) illustrates the elimination of a recessionary gap, then the economy should move to what point on the curves shown in Figure 33-6 (b)?

Accepted Answer

A) From e to r 
B) From g to j 
C) From r to j 
D) From r to m 
A) From e to r 
B) From g to j 
C) From r to j 
D) From r to m

Question 16

The Keynesian view of the world is that the

Accepted Answer

A) self-correcting mechanism is unreliable. 
B) benefits of fighting unemployment are high and the costs are low. 
C) short-run Phillips curve is relatively flat. 
D) All of these responses are correct. 
A) self-correcting mechanism is unreliable. 
B) benefits of fighting unemployment are high and the costs are low. 
C) short-run Phillips curve is relatively flat. 
D) All of these responses are correct.

Question 17

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 the

Accepted Answer

A) worst recession occurs when output expands most rapidly. 
B) slowest inflation occurs when output expands most rapidly. 
C) slowest economic growth occurs when output grows most rapidly. 
D) most rapid inflation occurs when output expands most rapidly. 
A) worst recession occurs when output expands most rapidly. 
B) slowest inflation occurs when output expands most rapidly. 
C) slowest economic growth occurs when output grows most rapidly. 
D) most rapid inflation occurs when output expands most rapidly.

Question 18

Figure 33-5
​  
-Over a five-year period, economists observed that the unemployment-inflation relationship appeared as in Figure 33-5.Economic theory would conclude that the period

Accepted Answer

A) was dominated by supply shocks such as increased energy and food costs. 
B) was affected by both supply and demand shocks, with demand shocks dominating. 
C) was dominated by demand-side changes. 
D) cannot be explained because the relationship is the opposite of what the Phillips curve would predict. 
A) was dominated by supply shocks such as increased energy and food costs. 
B) was affected by both supply and demand shocks, with demand shocks dominating. 
C) was dominated by demand-side changes. 
D) cannot be explained because the relationship is the opposite of what the Phillips curve would predict.

Question 19

Policymakers who believe that the costs of inflation are very high will tend to favor which of the following during an inflationary gap?

Accepted Answer

A) Moderate fiscal stimulus, no monetary stimulus 
B) Fiscal and monetary tightness 
C) Moderate monetary stimulus, fiscal tightness 
D) Strong fiscal and monetary stimulus 
A) Moderate fiscal stimulus, no monetary stimulus 
B) Fiscal and monetary tightness 
C) Moderate monetary stimulus, fiscal tightness 
D) Strong fiscal and monetary stimulus

Question 20

Inflationary gaps lead to rising unemployment and rising inflation.

Accepted Answer

A) True 
 B)False

Exam 33: The Trade-Off Between Inflation and Unemployment

A nonpolicy reason for the reduction in the natural rate of unemployment is the

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

Figure 33-3 ​ -Given the situation in graph (1) in Figure 33-3, what movement would be expected in graph (2) from the economy's self-correcting mechanism?

Figure 33-7 ​ -In Figure 33-7, the case for restrictive monetary and fiscal policy is strongest at point

If AS increases at a faster rate than AD, the result will be

The rapid advance in computer technology is one of the reasons given for the shift of the

Figure 33-7 ​ -In Figure 33-7, the only sustainable long-run equilibrium position is at point

Figure 33-8 ​ -In Figure 33-8, which of the following movements reflects the Fed's anti-inflationary policy of the early 1980s and the following market adjustment?

Figure 33-8 ​ -In Figure 33-8, which of the following movements reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy?

If the favorable supply shocks of the 1990s were reversed in the future, we should expect a(n)

Many economists think that, in the long run, the Phillips curve is

One explanation for the increase in the natural rate of unemployment in 2010 was a mismatch between the skills of the American labor force and the skills that the modern job market demanded.

What is the effect of supply-side inflation on the short-run Phillips curve?

Figure 33-8 ​ -In Figure 33-8, which of the following movements reflects the closing of a recessionary gap through the economy's self-correcting mechanism?

Figure 33-6 ​ -If Figure 33-6 (a) illustrates the elimination of a recessionary gap, then the economy should move to what point on the curves shown in Figure 33-6 (b)?

The Keynesian view of the world is that the

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 the

Figure 33-5 ​ -Over a five-year period, economists observed that the unemployment-inflation relationship appeared as in Figure 33-5.Economic theory would conclude that the period

Policymakers who believe that the costs of inflation are very high will tend to favor which of the following during an inflationary gap?

Inflationary gaps lead to rising unemployment and rising inflation.

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

Filters

Figure 33-3 -Given the situation in graph (1) in Figure 33-3, what movement would be expected in graph (2) from the economy's self-correcting mechanism?

Figure 33-7 -In Figure 33-7, the case for restrictive monetary and fiscal policy is strongest at point

Figure 33-7 -In Figure 33-7, the only sustainable long-run equilibrium position is at point

Figure 33-8 -In Figure 33-8, which of the following movements reflects the Fed's anti-inflationary policy of the early 1980s and the following market adjustment?

Figure 33-8 -In Figure 33-8, which of the following movements reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy?

Figure 33-8 -In Figure 33-8, which of the following movements reflects the closing of a recessionary gap through the economy's self-correcting mechanism?

Figure 33-6 -If Figure 33-6 (a) illustrates the elimination of a recessionary gap, then the economy should move to what point on the curves shown in Figure 33-6 (b)?

Figure 33-5 -Over a five-year period, economists observed that the unemployment-inflation relationship appeared as in Figure 33-5.Economic theory would conclude that the period